USDA may have estimated record soybean acreage for 2009, but the estimate was actually a million acres less than what the trade was expecting, according to analysts speaking at a CME Group press briefing on USDA’s June 30 Planted Acreage report. Conversely, USDA’s estimate of corn acres was 3 million acres higher than expectations.
USDA estimated U.S. corn acreage at 87 million acres, compared to 83.9 million acres for the average trade estimate. For soybeans, USDA estimated 77.5 million acres planted, compared to 78.1 million acres for the average trade guess. For all wheat, USDA estimated 59.8 million acres planted, compared to analysts’ projection of 58.2 million acres.
According to Greg Wagner, an analyst with AgResource, “the standout number is the corn acreage, which defies a lot of conventional thinking and is a full 3 million acres above projections. USDA is going to have to adjust ending stocks higher.
“This is the third consecutive season that USDA has elected to use a sub-trend yield for corn because of weather conditions. So despite the rise in acres, we still have a long way to go before we have a crop made, and that needs to be emphasized. Despite (good) crop condition ratings, there could have been leaching of nutrients.”
Wagner said that for soybeans, “we’re going to have a continuation of tight stocks. Again defying trade expectations, USDA has planted acreage 1 million acres under what the trade had thought.”
Brian Basting, with Advance Trading, said USDA found missing acreage that didn’t show up in the agency’s March Planting Intentions report. “The corn acres number did confirm what we’ve been hearing from a lot of our customers, particularly out west, of ideal planting conditions west of the Mississippi which have allowed producers to continue planting corn this spring.
“East of the Mississippi, I think it’s just a function of USDA underestimating the situation back in March. We did lose acres in Illinois and parts of southern Indiana due to wet conditions, but we found out today that Indiana acreage is unchanged from a year ago and Illinois is up a bit.”
Both corn and soybean crops are now entering a weather market. “A lot of these crops are lagging in maturity, and we’ll need a bit of a late fall this year,” Basting said.
According to USDA’s quarterly stocks report, there are 4.26 billion bushels of corn in stock compared to 4.18 billion bushels for the average trade estimate. For soybeans, USDA estimated 597 million bushels in stock, compared to the average trade estimate of 585 million bushels. For wheat, USDA estimated 667 million bushels in stock, compared to analysts’ estimate of 670 million bushels.
Basting says the numbers “are bearish for corn and beans and neutral for wheat. It’s important to note that the feeding number for the third quarter was a bit disappointing. It confirms the struggles that the livestock industry is encountering. That’s something to keep an eye on down the road.”
Nonetheless soybean stocks are still tight and with the acreage number below expectation, “we really need a healthy bean crop in 2009 to help rebuild stocks. The market’s perception as we enter the last quarter is that the bean market is tight.”
“Demand is really a dominant feature for corn,” Wagner said. “Look at the liquidation in beef, hogs and poultry. It’s across the board. Ultimately, you could build a dynamic bull market. But when that market commences remains to be seen.”
Bastings says a “slow healing process” is taking place in the ethanol industry. “We’ve seen the margins creep back into positive territory, after a long period of losses. We are seeing some plants expand and come back on line. Looking ahead, the USDA is projecting a pretty significant increase (in corn for ethanol) for 2009-10. There are still a lot of unknowns out there. We have to keep an eye on what the oil price does. But those who were about to throw in the towel six months ago may want to hang in there now.”
“One of the more astonishing features of the ethanol industry is that it’s been able to maintain the production level that it has,” Wagner said. “The crop year for ethanol starts in September and that’s when the whole credit crisis blew up. Since then, we’ve seen a remarkable resiliency in production. I think that industry has come through in flying colors.”