WASHINGTON, March 31, 2016 – Two Department of Agriculture reports released on Thursday did little to boost already sour commodity prices, but rather took them in the other direction.
The Grain Stocks and Prospective Plantings reports were released by USDA’s National Agricultural Statistics Service and painted a picture of a healthy amount of crop adding to a market that already had plenty of grain on hand.
The plantings report boosted USDA’s already increased corn acreage estimates. Corn acreage is projected at 93.6 million acres, a 6 percent jump in actual 2015 acres and still higher than the 90 million acres the department projected in February at the Agricultural Outlook Forum. If realized, it would be the biggest planted acreage since 2013 and the third highest amount since 1944.
Corn stocks compared to last year are up 1 percent to 7.81 billion bushels.
Soybean acreage is projected at 82.2 million acres, virtually in line with the 82.5 million acres USDA projected in February. A drop of less than 1 percent from last year, NASS said planting intentions are down or unchanged in 23 of the 31 states included in the estimates.
Soybean stocks totaled 1.53 billion bushels, a 15 percent jump from last year.
Wheat acreage is projected to see even more of a decrease than originally thought by USDA. In February, the department estimated a 6.7 percent drop in planted area, but Thursday’s report puts the figure closer to 9 percent to 49.6 million acres.
Wheat stocks took a sizable jump to 1.36 billion bushels, a 20 percent increase from last year.
Don Roose with U.S. Commodities categorized the reports as negative, primarily due to the increase in corn acres.
“From here forward, to get anything positive going, particularly on corn, you’re going to have to have weather issues,” Roose told Agri-Pulse.
Within 30 minutes of the reports releases, the corn market had suffered double-digit losses, mainly on the potential for increased acres, Roose said. Despite the jump in stocks, very little movement was observed in the corn or wheat markets because the increases were largely in line with analyst projections. Since prices are low across the board, Roose said current language in farm programs could be driving producer decisions to plant more corn.
“I think the producer looked at the insurance rates on corn and soybeans and looked at the profitability and thought . . . that gave us the best chance in a negative year to come up with at least a better chance of profit probability,” he said.
While growing more and more corn could, in turn, continue to lower prices and hurt the farm bill programs that are based on 5-year Olympic averages, Roose said the producer’s hand is somewhat forced.
“Insurance is coming down, the coverage is coming down, but what do you do?” he said. “It’s mainly a reflection of the market conditions that are driving everything.”
In other commodities, cotton planted area is estimated up 11 percent to 9.56 million acres despite tough times in the industry. Grain sorghum stocks jumped 68 percent – the largest of any commodity – to 201 million bushels.
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