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With the release of a highly anticipated Acres and Stocks Report from the USDA, markets reacted quickly.
Corn planted acres were up by seven percent, estimated at 94.1 million acres. Stocks were up about six percent, holding about 4.72 billion bushels of corn. The corn markets fell in the red ending down in the double digits.
Soybean planted acres were only up a percent at a record high 83.7 million acres. Soybean stocks were up 39 percent at 870 million bushels. Bean markets rallied some losses from the report anticipation, ending up more than 30 cents a bushel.
Market Analyst Dan Hueber with the Hueber Report says his first reaction is how strongly the market reacted, “Of course the market is what tells us what the real reaction is on how they perceived it and came out leading to the negative side for corn and a little to the positive side for soybeans. Of course keep in perspective here that this is all in relationship to what the trade was really anticipating. When you go back, where were the changes versus the last reports in March, they’re not quite as dramatic as some of the action might indicate today.”
Hueber says the key takeaway is not to panic, “Of the six million that increased here today about a million of that came from Missouri and Kansas. Seventeen percent of that increase came from states that are really kind of suffering through a drought to a point. Another million of that came from South and North Dakota, which are good producing areas but they’re not going to be putting out the yields that the high states tend to put out. If you look at the high states, through the Minnesota end there were about another million acres, so about 50 percent of the increase came between those three areas. So with the USDA already out there with 168 bushels to the acre on the previous reports, which would be the third highest yield on record, to maintain those kind of yields I think is going to be very challenging.”
According to Hueber, the markets tend to react when there is a surprise, “I guess we’ve kind of grown accustomed to that. The USDA has not been shy about throwing out numbers with big adjustments in the figures themselves. And again, keep in perspective that this is what the trade set itself up for, they were expecting to see lesser corn acres a little more on the bean acreage, definitely versus that March report. It didn’t work out to the lowest kind of extremes for either one. it turned out the corn versus trade estimates, the corn acreage was about 1.4 million higher than what the trade was expecting if you look at it versus last year, it’s about 6 million acres higher than a year ago. So, no two ways around it. We’ve got more corn acres in the ground this year. Of course the bigger question might be, where are those acres? And I think that ultimately could be the determining factor on longer term on if this is really a bullish or bearish thing.”