Stockpiles of U.S. corn and soybeans are smaller than expected, giving a boost to futures prices in the near term, although massive harvests of the two most widely planted crops in the nation are on the horizon. In its Grain Stocks report, the government said the corn inventory was 2-percent smaller and soybeans 7-percent smaller than analysts had predicted. And the USDA’s estimates of corn and soybean plantings, appearing in its Acreage report and based on a survey of 70,000 producers, were marginally below trade expectations.
The planting data point to the second-largest soybean crop ever and the third-largest corn harvest. They would come on the heels of record-setting harvests for both crops last year, which have depressed commodity prices.
Analyst Jerry Gidel of the consulting firm Rice Dairy said the bombshell from the USDA reports were the lower-than-expected estimates of soybean (625 million bushels) and corn (4.4 million bushels) stockpiles as of June 1. Economist Darrel Good of U-Illinois wrote at farmdoc daily that the reports “substantially increase the odds that the average farm price will be above $4 (per bushel for corn) for the 2015/16 marketing year and that the average soybean price will once again be near $10.” That would be the second-lowest corn price in six years and the lowest soybean price in six years.
Corn futures rocketed as a result of the USDA reports, ending the day 7-percent higher. Soybean futures were up by 5 percent. For both crops, said Agrimoney, traders believe the rainy spring will result in lower yields from saturated soils that drown plant roots and flush away nutrients. Agrimoney said soybean growers may elect to collect insurance payments for prevented plantings rather than sow a crop late in the season. Purdue economist Chris Hurt said excessive rainfall has reduced the likely value of Indiana’s corn and soybean crops by $475 million.
Repeated rainstorms slowed soybean planting in the western Corn Belt and the central and southern Plains. Some 5 million acres of soybeans are yet to be planted, with each day of delay reducing likely yields. The USDA’s estimate of a record planting of 81.5 million acres of soybeans this year, up 2 percent from the mark set in 2014, is drawn from its survey conducted during the first two weeks of June. Corn plantings are estimated at 88.9 million acres, down 2 percent from last year and the smallest since 2010.
The USDA said it would conduct a follow-up survey of soybean growers in Missouri, Kansas and Arkansas, where delays were the worst, and update its figure in August “if the newly collected data justify any changes to the current estimates.” The three states account for 15 percent of U.S. soybean production. The USDA also will re-survey cotton growers in Texas and sorghum farmers in Kansas. Texas is the top cotton-growing state and Kansas is the U.S. leader in sorghum.
Farmers are planting far more sorghum than expected – 8.84 million acres. Drawn by surging market prices and heavy demand from China, sowings are up 24 percent from last year. The crop could get to 500 million bushels, which would be the largest since 2001.
By contrast, cotton plantings are estimated for 9 million acres, down 18 percent from last year and the smallest since 1983. The world market is glutted with cotton and prices are low. The farm-gate price for this year’s crop is projected by the USDA to be 60 cents a pound, roughly the same as the 2014 crop and far below the 77.9-cent average for the 2013 crop.
Oat and barley plantings are up by more than 10 percent from last year but still small: Barley area is the fourth-lowest on record and oats would be the fifth-lowest ever.
The acreage report tends to list larger corn and soybean acreage than the year-end tally, says the USDA. It says the margin of error on corn is plus or minus 1.6 percent and 2 percent for soybeans.