June 30, 2009

Surprise, Corn Got Planted!

For months now, market observers have expected that high input costs, wet weather and planting delays would lead to reduced corn acreage in 2009. This has not happened! Today's USDA Acreage report indicated a surprisingly second largest corn planted acreage since 1946. The 2009 corn planted acreage is placed at just over 87.0 million acres. This is above the pre-report range of trade estimates that topped at 86.0 million acres and an increase over last year's corn acreage of nearly 86.0 million acres. The corn acreage is also more than 2 million acres more than the planting intentions that the USDA reported in March.

Soybean acreage is reported at a record 77.5 million acres. This is within the pre-report range of estimates from 75.3 to 79.6 million acres, but below the average expectations of 78.3 million acres. However, the soybean acreage is higher than the intended acreage of just over 76.0 million acres.

Total wheat planted acreage of 59.8 million acres is down from last year's 63.2 million acres. But this is above the range of pre-report trade expectations that averaged 58.8 million acres.

Planted acres for corn, soybeans and wheat are 4.6 million acres above the intended acreages reported in March. Cotton acreage at 9.0 million acres is up from the March intentions, but down from last year's 9.5 million acres. Grain sorghum acreage at nearly 7.0 million acres is down from about 8.3 million acres in 2008. Surprisingly, especially for those located in the northern counties, corn acreage is up 300 thousand acres and soybean plantings are up 200 thousand acres in Missouri from last year. This is partially explained by a 450 thousand acres decrease in wheat acreage, but surprising given the planting delays and some fields still not planted in North Missouri.

The Grain Stocks report indicated corn supplies of 4.27 billion bushels on June 1, 2009. This was somewhat above the average trade estimate of 4.19 billion bushels and an increase over the year-ago stocks of about 4.03 billion bushels. Soybean stocks totaled 597 million bushels, which is down 12 percent from last year's 676 million bushels. The soybean estimate, while slightly above the average pre-report estimate, is within the range of trade expectations. The wheat stocks estimate of 667 million bushels was near the pre-report trade expectations averaging 670 million bushels. While these stocks appear adequate, most analysts will monitor use closely (especially for soybeans) to anticipate 2008-09 carryovers.

Most considered the news bearish for corn and expected futures prices to open sharply lower. The reports were called mixed for soybeans with slightly less than expected planted acres even though acreage is up from last year. However, the initial market reactions appear negative. In early futures trading, corn, soybean and wheat prices show double digit declines with the greatest losses in the corn market with some contracts down the thirty-cent trading limit.

Next update following the USDA July 10, 2009 WASDE reports