USDA's June 28 quarterly Grain Stocks and Acreage reports put a big smile on the faces of fund managers who came into the report with a large short position. USDA pegged corn stocks and corn planting much higher than traders had expected. Soybean stocks were a bit higher, but the drop in planted acres caught traders by surprise. Wheat futures were lower ahead of the report and weakened more as stocks came out higher than expected and harvested acres were more.
Let's break it down by commodity:
Corn producers and futures were hit with a double whammy by USDA's June 2024 Grain Stocks and Acreage report. The first hit came in the stocks estimate. Dow Jones' survey of traders was expecting stocks to come out at 4.867 billion bushels (bb), but USDA instead came out with a much higher 4.993 bb stocks number. That figured 890 million bushels (mb) above last year and 126 mb above trade expectations. The stocks number was up 24% from last year, with on-farm stocks, at 3.026 bb, rising 37% over a year ago, explaining the stout corn basis. Meanwhile, off-farm stocks were 1.967 bb, up just 4% from a year ago. March-through-May disappearance of corn amounted to 3.36 bb compared to 3.29 bb a year ago. The second quarter feed and residual use implied was 916 mb and down close to 90 mb from last year.
As if the bearish stocks number were not enough to discourage farmers, corn planted acreage was pegged at 91.5 million, up 1.5 million acres from the March intentions. That was enough of a shock to send new-crop corn careening to another new contract low and the seventh consecutive lower close. The cutoff for the acreage survey in mid-June was said to have occurred with another 3.36 million acres yet to be planted. The big mover in corn was Kansas, which saw corn acres rise by 10.5%; Minnesota and Iowa corn seeding increased each by over 2.3%.
Ahead of the report release, December corn was trading 4 cents higher, but by the close Friday, had plunged more than 20 cents below the daily high to finish down 13 cents at $4.20 3/4 after printing a new contract low of $4.12.
Soybean futures were trading higher before the report and got a boost from a surprisingly low acreage number. First, June 1 stocks were pegged at 970 mb -- about 13 mb higher than Dow Jones' survey of traders had expected and 174 mb above a year ago. That could be termed neutral to slightly bearish for beans. Of the stocks total, on-farm figured 466 mb, up 44%, and off-farm bushels were 504 mb, up just 6%. March-May disappearance on soybeans was 875 mb, and that was down 2% from last year.
On the planted acreage side, soybean seeding was pegged at just 86.1 million acres -- down 400,000 acres from March intentions and over 700,000 acres less than the Dow Jones trader survey had estimated. That initially sent the soy market higher post-report, but that euphoria did not last, as soybeans traded lower into the close. Since, at the time of the survey, there were still over 12 million acres of soybeans to be planted, we could see some revisions higher down the road, as massive flooding moved across parts of the Northern Plains and Upper Midwest. Since some of the corn planting was delayed or perhaps reseeded or switched, it is likely that we won't get any changes until the FSA acreage adjustments in August.
The relatively weak close in beans could suggest that traders don't agree with USDA. Spot July beans finished down 1 3/4 cents, with November down 3/4 cent after first hitting a new contract low of $11.
USDA's June 1 and final wheat stocks came out at 702 mb. That is 20 mb higher than the Dow Jones survey estimate and 132 mb higher than one year ago in June. The wheat market was down a nickel prior to the report, and this further weakened the market.
The all-wheat seeding was pegged at 47.2 million acres, down 5% from a year ago and down 300,000 acres from both March intentions and close to 400,000 acres less than the average estimate. Harvested acreage figured much greater than a year ago, likely due to less abandonment with the late rains in the southwestern Plains. Kansas' harvested acres were estimated at 1.4 million acres above last year, at 7.150 ma.
Winter wheat seeding came in at a lower-than-expected 33.8 ma, down over 300,000 from March. Spring wheat was right in line with trade expectations at 11.3 million acres, with 10.6 million of that hard red spring.
The wheat markets all ended lower, with Chicago September down 6 cents, KC September down 10 1/2 cents and Minneapolis down 5 cents.
The June 2024 Grain Stocks and Acreage reports turned out to be quite a surprise, especially for corn traders, with December hit with the bearish daily double of much larger stocks and planted acreage than anyone had expected. Soybean acres were surprisingly less than traders had expected, even with the early corn planting delays and later flooding. It is very possible that we may see some changes, but not likely until August. In the meantime, all three of these markets appear to be oversold, with some world weather and production issues yet to be resolved, including the Black Sea drought.
Dana Mantini can be reached at dana.mantini@dtn.com
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