With corn and soybean supplies at their tightest in years, the USDA’s June 30th Acreage report will be watched even more closely than usual.
Gro expects the report will show an expansion in corn area beyond the 91 million acres estimated in the USDA’s late March report. Gro’s Planting Intentions model projected corn area at 93 million acres when it was released in mid-March. The model considered local cash prices in the month of February, among other variables, and prices of both corn and soybeans have only rallied further in recent months.
In fact, an increase over the March Prospective Plantings report figures (of new crop corn and soybean area at 91.1 million and 87.6 million acres respectively), is required for production to keep up with increasing demand. Otherwise, inventories will be drawn down further.
Recent rains have aided development of both corn and soybeans, as reflected in Gro’s Climate Risk Navigator. But dry pockets persist in the Northwest of the corn belt, and with hot and dry conditions expected in July, production will be even more at the mercy of the weather than usual.
Gro has long suggested that a perfect season will be needed to ensure adequate supply in the current high demand environment, and with ongoing problems in the western corn belt, yields elsewhere will need to be exceptional if production is to be higher than last year.
Gro’s machine-learning US corn and soybean yield forecast models update daily at the county level, and are then aggregated by state to provide a national figure. Granular yield data is often more valuable for price forecasting than broader aggregations.
China has been an avid buyer of US new crop corn and soybeans, securing over 1 million tonnes of soybeans in the last several days. China typically ramps up its US soybean purchases in August, following the US harvest and drawdown of available Brazilan supplies. The recent purchases represent an unusually early switch to US supplies, and have driven prices higher. Current new crop outstanding corn sales, at well over 10 million tonnes, are a record for this time of year, as Gro data highlights.
Gro’s Futures Spread app shows both corn and soybean futures spreads inverted, at values not seen since the tight years of 2013 and 2014, suggesting demand remains active in spite of a recent fall in some cash prices.
A major market move in response to the June 30th reports looks like a near certainty.
This insight was powered by the Gro platform, which enables better and faster decisions about factors affecting the entire global agricultural ecosystem. Gro organizes over 40,000 datasets from sources around the world into a unified ontology, which allows users to derive valuable insights such as this one. You can explore the data available on Gro with a free account, or please get in touch if you would like to learn more about a specific crop, region, or business issue.