USDA Reports Preview

USDA's Acreage report and Quarterly Grain Stocks for June 1 will be released Thursday, June 30, at 11 a.m. CDT. Popular attention is usually focused on the planting estimates, but don't overlook USDA's estimates of corn and soybean stocks heading into the final stretch of 2021-22.

ACREAGE

At this year's Annual USDA Ag Outlook Forum in late February, USDA estimated 92.0 million acres of corn plantings, 88.0 million acres of soybeans and 48.0 million acres of wheat. A month later, USDA's March survey of planting intentions pegged corn acres at 89.5 million, soybeans at a record-high 91.0 million and all wheat plantings at 47.4 million.

With all due respect, the above estimates do not belong in the same category of reliability USDA's June 30 Acreage report will offer, meaning that a surprise is possible for those of us swayed by the earlier, less meaningful estimate attempts.

USDA's record of the past 20 years shows the June 30 corn planting estimate has a 90% confidence interval of plus or minus 1.8% or 1.6 million acres in today's terms. The 90% confidence interval for soybean acres is higher, at plus or minus 2.7 million acres, and both estimates tend to be higher on June 30 than the final estimates turn out to be.

We can also say from the dreadful experience of 2019 that abnormal weather is typically the biggest threat to the reliability of USDA's June planting estimate. Fortunately, this year's weather-related planting problems were largely limited to eastern North Dakota and northwestern Minnesota, so I expect Thursday's estimates to be fairly accurate.

Understanding the inherent imperfections, Dow Jones' survey of analysts expects USDA NASS to estimate planted acres at 89.69 million for corn, 90.43 million for soybeans and 46.89 million for all wheat.

A further breakdown of wheat planting estimates shows expectations for 34.23 million acres of winter wheat, 10.81 million acres of other spring wheat and 1.84 million acres of durum. If spring wheat acres are less than 11.02 million, it will be the smallest since 10.14 million were planted in 1972, the year President Richard Nixon was elected to a second term.

With this year's extremely high fertilizer prices, a new booming industry of renewable diesel plants and early planting delays in the Northern Plains, it does seem likely that soybean acres will exceed corn acres for the first time since 1983, the year of the PIK program. The corn/soybean total is apt to stay below last year's record high of 180.6 million.

JUNE 1 GRAIN STOCKS

As Rodney Dangerfield would say, June 1 Grain Stocks get no respect, compared to USDA's popular Acreage estimates, but the lack of respect is not deserved. USDA's Grain Stocks reports have their own flaws, but they are the most important reporting effort U.S. grain markets have and are the primary check on the numbers in USDA's WASDE reports.

For corn and soybeans, there is a good chance June 1 stocks may come in lower than expected this year and earn their keep in terms of keeping prices more honest than they otherwise would be. Dow Jones' survey expects USDA to find 4.330 billion bushels (bb) of corn stocks on hand as of June 1, up from 4.111 bb a year ago.

So far in 2021-22, corn stocks have been running above year-ago levels, last seen 254 million bushels (mb) higher in the March 1 report. Since then, however, basis has remained strong, and the July-September corn spread has widened to nearly 90 cents with July above the September contract. Such a wide premium suggests strong commercial demand for tight supplies of old-crop corn. Don't be surprised if June 1 corn stocks come in below 4.300 bb.

Dow Jones' survey expects USDA to find 959 mb of soybean stocks on hand as of June 1, but again, I expect a lower number. USDA's ending stocks estimate for U.S. soybeans in 2021-22 is 205 mb, 52 mb less than the previous year's 257 mb.

USDA's March 1 report showed U.S. soybean stocks 369 mb above the previous year's total at 1.931 bb. At that time, the July-August soybean spread showed a 43-cent premium, July over August. As of Tuesday's close, July soybeans were priced $1.07 1/4 above the August contract, an extremely bullish indication of old-crop supplies that the market has not seen since the days following the drought of 2012.

For wheat, Dow Jones' estimate of 655 mb matches USDA's ending stocks estimate for 2021-22 in the June WASDE report. U.S. wheat exports have been notoriously slow in 2021-22, and final stocks may end up a little higher than expected, but any surprise is apt to be small.

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At 12:30 p.m. CDT Thursday, DTN will host a post-report webinar, and you are welcome to join. We'll go over USDA's new estimates, what they mean for prices and answer any questions you might have. Join us live on Thursday or use the link that is later provided to watch the webinar at your convenience. Register now at: https://ag.dtn.com/….

Todd Hultman can be reached at todd.hultman@dtn.com

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