Corn futures fell sharply after USDA projected that farmers would plant more corn acres this year, and the department reported that there is more grain in storage than analysts expected. USDA’s Prospective Plantings report projected soybean acres to be lower than last year.
Corn acres are expected to be up 4 percent from last year to 92.8 million acres.
Steve Georgy, president of Allendale, Inc., said a drop in corn future prices Friday initially reflected estimates in the Quarterly Grain Stocks Report. Corn stocks totaled 8.6 billion bushels, down 3 percent from a year ago. But the estimate was higher than what the trade was expecting "and that kind of set things off, having the corn market on the defensive all day,” Georgy said.
The May futures price on the Chicago Board of Trade fell more than 4 percent.
Georgy anticipates USDA to lower planted acres due to weather concerns but also said traders have “record short positions,” so they will make a profit if the corn price falls. He said traders may want to leave those positions, which could move the “corn market higher.”
The acreage estimates released Friday are based on surveys conducted during the first two weeks of March.
Corn acres are projected to be higher in 34 out the lower 48 states to total up the highest number of planted corn acres since 2016. USDA predicts some of the most substantial acreage increases in Iowa, North Dakota, and South Dakota.
Soybean acres are down 5 percent from the previous year with an expectation of 84.6 million acres to be planted in 26 out of 29 estimating states. Iowa, Illinois, Minnesota, Missouri, Nebraska, North Dakota, and South Dakota are all projected to lose at least 300,000 acres.
Soybean stocks totaled 2.72 billion bushels, down three percent from last year. Georgy said traders need to see a deal done with China, which would bring demand back and move markets higher. That right there, he said, “is the noose around the beans neck.”
Planted wheat acres are the lowest on record since estimates began in 1919. USDA anticipates 45.8 million acres of wheat to be planted, which is down four percent from this time last March.
“When you look at USDA’s current pace that they have the wheat on, as far as export sales, we still are not with their pace yet, so we’re still behind,” Georgy said. He added that will continue to “keep a cap” on numbers until there is stronger demand.
Of total acres, 22.4 million will go to hard red winter wheat, 5.5 million to soft red winter, and 3.5 million to white winter. Record low acres are expected in Nebraska. The grain stocks report pegged U.S. wheat stocks at 1.6 million bushels, up six percent from a year ago.
U.S. cotton acres are two percent lower than last year, projected at 13.8 million acres.
Georgy added the markets will watch the weather in the days ahead as more and more farmers move into planting. With the recent flooding and potential for more in farm country, he noted USDA will likely have to revise their planted acres estimates in June.
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