In the wake of USDA’s June Acreage and Grain Stocks reports it’s important to keep in mind that the acreage story is far from over.
Don’t forget that last year we added approximately 3 million acres of corn from the June WASDE to the final production number in January. Now I know no one wants to see a repeat of last year, but I just want to highlight how much we can change from now till the end of the year on acreage alone.
Here’s a recap:
- The biggest surprise was corn ending stocks coming in significantly lower than trade expectations of 5.295 billion bushels vs. analyst estimates of 5.408 billion bushels. While a nice surprise and a number that shows we have excellent corn demand, I should point out that year-on-year corn stocks grew significantly: over 650 million bushels (5.295 vs. 4.643 respectively).
- Soybeans saw a slight increase of 15.1 million bushels.
- Wheat ending stocks dropped a little more than 13.8 million bushels.
Overall, I would categorize it as a neutral report. Corn and soybean acres were close to where the March acreage intentions were: up 5,000 acres on corn and 665,000 on beans. A million-acre drop in wheat was the surprise, though it shouldn’t have been given the growing season we’ve seen out west.
One thing with big USDA reports like this is not only the numbers but also the price action. Though we often see a bearish number cause a bullish reaction due to the trade already having a bearish number baked in, here we objectively had a bearish report, but beans, corn and wheat initially popped higher.
What’s next for grain prices?
Now the million-dollar question: Where do we go from here?
While the report was a far cry from being a runaway bullish report, grain bulls can hope that we’ve at least established a nearby floor and allow the market to start digesting weather and outside market news. Make no mistake, we need something to flip to start retesting previous highs. Make sure you’re staying flexible in your marketing plan.
The risk of loss in trading futures and/or options is substantial and each investor and/or trader must consider whether this is a suitable investment. AgMarket.Net is the Farm Division of John Stewart and Associates (JSA). This material has been prepared by an agent of JSA or a third party and is, or is in the nature of, a solicitation. By accepting this communication, you agree that you are an experienced user of the futures markets, capable of making independent trading decisions, and agree that you are not, and will not, rely solely on this communication in making trading decisions. Past performance, whether actual or indicated by simulated historical tests of strategies, is not indicative of future results. Trading information and advice is based on information taken from 3rd party sources that are believed to be reliable. We do not guarantee that such information is accurate or complete and it should not be relied upon as such. Trading advice reflects our good faith judgment at a specific time and is subject to change without notice. There is no guarantee that the advice we give will result in profitable trades. The services provided by JSA may not be available in all jurisdictions. It is possible that the country in which you are a resident prohibits us from opening and maintaining an account for you.