Friday, July 01, 2011
The Numbers Behind USDA’s June 30 Reports
The value of corn and soybeans nosedived today, following USDA’s long awaited Planted Acreage Report and the Quarterly Grain Stocks Report. Basically USDA reported more corn acres have been planted and will be harvested than any grain trader imagined. Furthermore, USDA says there is more grain on hand than anyone imagined, given the demand of recent months. Subsequently, July corn closed 69¢ lower, and had been 82¢ lower at one point.
USDA’s Planted Acreage Report indicated that 92.282 million acres were planted and 84.888 million acres will be harvested. Both were well above the range of trade estimates. In the reports notes, USDA said even though a slow start to the planting season and many delays, particularly in the eastern Cornbelt corn was finally planted by June 12. Although extensive flooding had been documented along Upper Midwestern Rivers, that issue was not addressed by USDA, other than to refer to flood water of the Ohio and Mississippi Rivers as working its way downstream.
USDA statisticians noted substantial increases in corn acreage in many states. Among those in the Cornbelt were:
IL 12.5 mil planted, down 100,000 from 2010
IN 5.9 mil planted, equal to 2010
IA 14.2 mil planted, up 800,000 from 2010
KS 5.1 mil planted, up 250,000 from 2010
MI 2.55 mil planted, up 150,000 from 2010
MN 8.1 mil planted, up 400,000 from 2010
MO 3.25 mil planted, up 100,000 from 2010
ND 2.3 mil planted, up 250,000 from 2010
NE 10 mil planted, up 850,000 from 2010
OH 3.5 mil planted, up 50,000 from 2010
SD 5.2 mil planted, up 650,000 from 2010
WI 4.15 mil planted, up 250,000 from 2010
USDA said the 92.3 million acres would be the second highest planted acreage since WWII, following only 2007 with its 93.5 million acres. Even though North and South Dakota increased their corn and soybean acreage, USDA statisticians reported, “At the time of the survey, a large percentage of acres remained to be planted in four states: Minnesota, Montana, North Dakota and South Dakota. To better assess planted acreage, NASS will resurvey the growers in these states in July.” There was no indication if a resurvey would occur in either Ohio or Indiana, where similar situations existed with the wet weather. And there was no indication if USDA would attempt to factor in the lost acres along the major rivers, which would represent an adjustment on harvested acres.
The USDA’s notes about soybeans included a 75.2 million acre projection, which was well below the range of estimates from traders. That acreage would be the least since 2007, which was the high water mark for corn. Interestingly, USDA said acreage decreased in 21 out of the 31 soybean producing states. The statisticians reported on delayed planting for beans along with historic flooding, but did not indicate any acreage had been lost as a result of the flooding. The market took the soybean market down 20 to 30 cents per bushel, which was a function of the overwhelming bearish news for corn. Among those Cornbelt states, soybean planting was reported as:
IL 8.9 mil planted, down 200,000 from 2010
IN 5.3 mil planted, down 50,000 from 2010
IA 9.8 mil planted, down 600,000 from 2010
KS 3.9 mil planted, down 400,000 from 2010
MI 1.95 mil planted, down 100,000 from 2010
MN 7.2 mil planted, down 200,000 from 2010
MO 5.1 mil planted, down 50,000 from 2010
ND 4.2 mil planted, up 100,000 from 2010
NE 4.75 mil planted, down 400,000 from 2010
OH 4.7 mil planted, up 100,000 from 2010
SD 4.3 mil planted, up 100,000 from 2010
WI 1.66 mil planted, up 20,000 from 2010
Along with the Acreage report, USDA released estimates for grain stocks. Corn stocks were estimated at 3.67 bil bushels which were left after three month usage of 2.85 bil. bu. That was well below the 3.38 bil. bu. consumed in the comparable period of 2010. Farmers are holding 1.67 bil bu. of corn says USDA.
Soybean stocks were estimated at 619 mil. bu. up 8% from the same period of last year. Disappearance was estimated at 630 mil. bu. for the quarter, which was down 10% from year earlier levels. USDA says farmers are still holding on to 218 mil. bu. of beans.
While the stocks reports were bearish for both corn and soybeans, the acreage reports were bearish for corn and bullish for beans. The next Supply and Demand report on July 12 will estimate the carryover at the end of the marketing year.
Summary:
USDA estimates of planted acreage was a surprise for corn at 92.3 mil. acres, more than the March prospective plantings report and more than what all of the trade had estimated. But USDA’s projection for soybean planting went the other way. Less is being planted, compared to what the traders expected, and less than the March Intentions report. USDA did not report that any flooded out acreage was factored into their calculations.
Posted by Stu Ellis on 07/01 at 12:00 AM | Permalink
Comments
Posted by: Jib at July 1, 2011 8:08AM
Live by the Blind Die by the Blind
Fellow euchre players know the term; “Live by the Blind Die by the Blind.” At first glance the blind dealt by the USDA looked terrible and the market showed it. After further review, we might just get our point. We will not “get them all” but we just may not get “set” either. Trying to match/correlate the corn stocks numbers with historic numbers, one gets a range of annual corn use from 13.2 to 13.4 billion bushels. That puts fourth quarter use at 2.68 to 2.87 billion bushels. Ending stocks should come in around 800 to 1,000 million bushels. (Rounding may not get the numbers to add up.) Zoodoo (a process that find answers no matter how wrong) would place Dec futures in the $5.90 to $6.50 range. That is not the numbers we were expecting but still not to bad. The card distribution will determine the “games” winner. USDA first play does not make much sense from a “feed usage” point of view but we will see.
Jib aka Gibberish