This past week the USDA released the Quarterly Stocks Report and the Prospective Planting Report. In the days leading up to the report, I read several grain commentaries that all shared a similar message-these reports have tended to throw a little bit of a curve ball at the market. Prior to the report, I talked to a number of different people about what we could see come from these reports. All had a similar mindset that the report would be neutral to bearish for both corn and beans. So, I asked myself several times, what could this curveball be that has been known to happen? I never was able to come up with a good answer.
Report day came and the data did not disappoint and leave us without a surprise. Estimates for planted corn acres ranged from 89-92 million acres with the average estimate being 90 million acres. Many felt corn acres would be high because it’s been talked about a lot that farmers will plant more corn in an attempt to produce themselves to a profit. However, I don’t think anyone expected 93.6 million acres and that’s why the market reacted the way it did.
Now that the data dump is behind us and the market has had a chance to digest the reports, the focus of the market will now shift to weather. The data isn’t even a week old and there’s already talk about acres shifting away from corn. There’s a couple of reasons to cite for this. The first reason is that the Delta is having a hard time getting corn in the ground with the wet weather. When the USDA released planting progress data last week, Arkansas was 8 percent planted versus the 5-year average of 20 percent, Louisiana was 36 percent versus 61 percent average and Mississippi has only been able to plant 5 percent of the corn crop compared to an average of 29 percent. The Delta only accounts for 3 percent of U.S. corn production but it helps set the tone for the growing season. If the Delta stays wet enough long enough, talk will continue to grow about a shift from corn acres to soybean acres or another alternative. The other reason why there’s talk about a shift away from corn acres is the dryness that Southern Kansas is experiencing. If the dryness continues, producers will look to other alternatives rather than planting corn.
The USDA presented us with a burdensome acreage number for the 2016 crop. It looks like it will take a major weather headline or production issue to see a major rally. While it looks like we have a long, uphill battle ahead, things can change quickly. The growing season is just beginning and there is still a lot of uncertainty and weather related risk lying ahead. Keep in touch with your ProEdge Grain Specialist as we progress through the growing season to see what opportunities are available to help you market your grain.