UPDATED: Noon Central Time
USDA as expected delivered surprising results to the grain market today, dealing a big blow to new crop prices from increased acreage but keeping supplies of old crop corn and soybeans very tight.
Futures prices traded mixed as a result of the data. July beans overcame initial weakness to quickly turn higher, surging to their best level since the day before highs were set in September. USDA pegged June 1 soybean inventories at 435 million bushels, 5 million under trade guesses, reversing its bearish projection from March 28. July rallied up to a Fibonacci objective, hitting $15.72 before profit taking set in.
USDA’s news for new crop soybeans was less friendly. The government put 2013 seedings at 77.73 million acres, 602,000 more than farmers in March said they intended. While that was a little less than trade guesses, it still implies potential for a 3.4 billion bushel crop if yield potential is realized. Increases from March intentions were noted in Indiana, Iowa, Missouri, Nebraska and South Dakota. The report suggests at least some switching from corn to soybeans in Iowa, but not in other states.
That’s because USDA put corn seedings at 97.38 million, 97,000 above March intentions and more than 2 million above trade guesses. Based on current conditions, the report suggests production potential of more than 14 billion bushels, a prospect that punished December futures to trade below its May lows at $5.12.
Still, the acreage report showed effects of this spring’s wet conditions. Farmers planted less acreage than intentions in Iowa, Kansas, Minnesota, Mississippi, North Dakota and Wisconsin, offset by gains in Louisiana, Michigan, Nebraska and Texas.
The acreage data overwhelmed June 1 stocks data that was mildly supportive at 2.764 billion bushels, 81 million bushels less than analysts’ estimates. The report suggests stronger than expected feed usage, the opposite of the implication from the bearish March 28 report that produced limit down trading.
Old crop corn prices also turned higher in the first hour after the report.
Wheat prices mostly followed corn lower after two surprising reports. USDA’s estimate of June 1 stocks at the beginning of the 2013 crop marketing year was 718 million bushels, 27 million less than trade guesses, implying better than expected feed usage this spring. But total wheat acreage was actually up a little, despite losses in spring wheat and durum, due to a 2% increase in winter wheat seedings.
USDA put spring wheat acreage at 12.295 million, down 406,000 from March intentions due to a loss of 500,000 in North Dakota and 150,000 in Minnesota. Durum acreage was also lower from March at 1.5 million, down around 250,000.
The report supported prices in Minneapolis where July was a little stronger and September fell modestly. Prices in Kansas City and Chicago plunged to new lows but were able to pull off session bottoms.
Here are the links for the complete Acreage and Grain Stocks reports.