EHedger Quick Reaction To June 30 Acreage & Stocks Report
Overall, today’s numbers have a distinct bearish tinge across the board. On the quarterly stocks front, the market seemed to have anticipated a tightening in both corn and beans due to reports of consistently strong demand. However, both sets of inventories came in well above the average estimate to suggest that usage was not quite as hot as many had suggested.
On the acreage front, 87.035 planted acres of corn marks a 2 million acres increase from the March 31 numbers and a more than 1 million jump versus 2008 levels. This goes against expectations of a decline of 1-2 million acres that had been called for due to the persistently wet spring we’d seen in the Midwest. Clearly, US corn farmers persevered as prices remained attractive, and have now planted close to the highest amount of corn acres on record.
Bean acres of 77.483 million marks a 1.4 million rise since March 31 and a 1.765 million acre increase since a year ago. The higher plantings are no surprise given how high prices have been since the spring, but some market watchers may have been anticipating an even steeper acreage advance based on the wet weather that usually steers abandoned corn acres into soybeans.
Overall, the combination of higher stocks and higher acres has the potential to deflate these markets going forward, especially if the weather remains benign throughout most of the Midwest. However, corn has already lost more than 70 cents a bushel in Dec futures since the beginning of June on suspicions that acreage remained high while the weather outlooks improved. So, there’s uncertainty as to how much further the corn price will slump in the wake of this report. There’s plenty of downside room available in new crop beans, however, especially as the stocks number suggests more adequate inventories than had been projected.
