The old crop corn carryout number was left unchanged in the June Supply and Demand report, at 730 million bushels. The new crop was significantly reduced though, going from 900 million bushels in May to a minimal 695 million now. This reduction was the result of a 1.5 million-acre loss due to flooding across the Corn Belt.

Conversely, the soybean numbers were much less supportive to the market. Old crop carryout is forecast to increase 10 million bushels, to 180 million total. New crop ending stocks are now forecast to total 190 million, a large 30 million-bushel increase from the previous outlook. These came from increased acres and lower export forecasts.

The global corn supply is also forecast to tighten, with new crop stocks cut a large 18 million metric tons from a month ago. This is just a 47-day supply of corn. The global numbers were mostly unchanged on soybeans.
The nearby grain contracts have been the leaders recently, and most analysts credit this to buyers trying to secure old crop grain inventory. While this definitely is a factor for the rally in old crop contracts, there is likely another reason as well. This is the time of year when South American countries plant their second crops, and a higher cash market will help encourage additional seedings. This is a trend that started two years ago and, so far, has increased double-cropping in South America.

We are at a critical time in the planting season, as any unplanted corn acres in the United States at this time are more likely to shift to soybeans. This is especially the case in the Eastern Corn Belt, where a larger amount of unplanted acres remain.

It is also possible that given current market economics, some producers will opt to take prevented planting insurance payments on unplanted acres. Even after doing this, producers can still seed fields and harvest a normal crop in many locations.

Trade may receive an indication of this shifting in the USDA revised acreage report at the end of this month. Several analysts believe we will see a one- to two-million-acre reduction to corn acres due to flooding along the Missouri and Mississippi rivers and delays in the Eastern Corn Belt. While this may be true, there are others who claim much of this will be offset with increased corn plantings in the Western Corn Belt.

There are also some field scouts who claim the USDA has underestimated corn acres all year, and even with some shifting to soybeans, we may still see a higher corn acre estimate than in the March release.

History shows us there is little correlation between late corn planting and final yield. In four of the eight most recent years with slow planting, final corn yield was at or above initial estimates. The only year that final corn yield was significantly lower than trend was in 1988, and that was more from adverse weather during the growing season.

History also shows us the only year with significant corn acreage loss from slow planting was in 1995 when seedings declined 3.5 million acres.

More attention is being placed on the Black Sea region, and just how much grain we may see flow out of that area. The country being most watched is Russia, where a 38 percent rebound in grain production is forecast this year over last, when drought impacted the entire country. Much of this is going to be wheat, and will help fill in the void by any shortfall to global supply caused by yield loss in the United States.

Karl Setzer is a Commodity Trading Advisor/Market Analyst at MaxYield Cooperative®. His commentary and market analysis is available daily on radio, in newsprint and on the Internet at www.MaxYieldCooperative.com
The opinions and views in this commentary are solely those of Karl Setzer. Data used for this commentary obtained from various sources believed to be accurate. This commentary is intended for informational purposes only and is not intended for developing specific commodity trading strategies. Any and all risk involved with commodity trading should be determined before establishing a futures position.