CHICAGO, Ill. — Just looking at the USDA’s annual June Grain Stocks and Acreage reports last week might have led some to believe the futures market would stay still or drop – there are a record 85.1 million acres of soybeans estimated planted and stocks of soy, corn and wheat are all up sharply from June 2014.
The markets are often ruled by multiple factors, though, and even a 54 percent increase on last year’s soybean stocks fell short of market expectations. Traders reacted accordingly on the Chicago Board of Trade (CBOT), finishing the day of the USDA reports – June 30 – 57 cents higher than the previous day for November soybeans, at $10.37. December corn traded up 15 cents to almost $4.31.
The July 2015 increase for old-crop stocks jumped nearly 31 cents to $4.14 for corn and almost 54 cents, to $10.56, for soybeans. Price also rose for wheat, up 34 cents to just less than $6.15. In fact, CME Group, which oversees CBOT, reported its agricultural products set records for trading volume on June 30 in corn, soybeans and soft red winter wheat.
The USDA’s survey of planted soybean acres are down about 100,000 from market expectations; and corn, at 88.9 million acres, are down about 300,000, said AgResource President Dan Basse. Despite this, he explained, "I wasn’t all that surprised by the numbers; maybe I was more surprised by the reaction of the market, but I guess in the backdrop of all the rain, the funds came at us, and that’s where we ended the (trading) day," he said the afternoon of June 30.
"I think everybody spent today ‘what-if-ing,’" added Steve Freed, vice president of research for ADM Investor Services.
For instance, he said some traders may have been factoring a higher soy demand than the USDA suggested, or possibility of lower end yield.
He suggested the USDA’s July 10 monthly Crop Production report could update some of those Acreage numbers. Farmers were surveyed between May 30-June 16 for the latter report, according to Allendale, Inc. Chief Strategist Rich Nelson, but later on for the report to be released July 10.
Allendale conducted its own farmer survey across 26 states June 8-19 and, a week before the USDA reports, released its estimates of planted acreage. Nelson said because his firm’s report was slightly later and still during planting, he believes it may ultimately be more accurate.
Allendale’s corn estimate is 91.7 million acres, well above USDA’s survey; soybeans, at 85.1 million, is in line with the federal agency’s estimate; and all U.S. wheat, at 55.5 million (winter wheat is 40.6 million of this), is a little under USDA’s survey response of 56.1 million.
Nelson acknowledged on June 24 that Allendale’s corn number would probably be one of the highest coming from analysts. The firm thinks trend yield on corn is still a realistic expectation despite frequent rains – he said the northern third and central Corn Belt are doing "very well."
Of soybeans, he said perhaps 20 million acres are in a "problematic situation" that could produce slightly lower yield – like 42 bushels an acre instead of 45.
