The June USDA Acreage Report is always highly anticipated, because it becomes the first hard data after the March USDA Plantings Intentions Report to give an indication of crop production levels in a given growing season, as of June 1. Many times the June USDA report can have a big impact on grain market trends, either upwards or downwards, and 2016 did not disappoint. Producers planted both more corn and soybeans, compared to the March Planting Intentions Report, according to the latest USDA Report on June 30. USDA surveyed more than 70,000 agricultural producers during the first two weeks of June to gather information for the June 30 report.
The June 30 USDA Acreage Report listed total 2016 planted corn acres in the U.S. at 94.15 million acres, which is up 7 percent from the 2015 planted acres, and is the third largest planted corn acres on record since 1944. The report showed an increase of about 450,000 planted corn acres, compared to the March USDA Planting Intentions Report earlier this year. The 2016 U.S. estimated corn acreage compares to 88 million acres in 2015, 90.6 million acres in 2014, 95.4 million acres in 2013, and 97.2 million acres in 2012. The June 30 USDA estimates for U.S. planted corn acreage in 2016 was well above the average of major grain analysts, and resulted in a sharp decline in both old-crop and new-crop corn futures prices on the Chicago Board of Trade (CBOT).
The June 30 report estimates that a record number of soybean acres will be planted in 2016 across the U.S. The report listed 2015 planted soybean acres at 83.69 million acres, which is an increase of about 1 million acres from the 2015 planted soybean acres, and was an increase of approximately 1.45 million acres from the March 1 planting intentions. Record soybean acreage in 2016 is likely in several states, including Minnesota, North Dakota, Ohio and Wisconsin. The USDA projections for 2016 planted soybean acreage were slightly below the average grain trade estimates, which initially resulted in some increases in CBOT soybean futures prices.
The June 30 report pegged total 2016 U.S. wheat acreage at 50.8 million acres, compared to 54.6 million acres in 2015, and 56.8 million acres in 2014. The estimated 2016 cotton acreage is 9.8 million acres, which is an increase of 17 percent from 2015. Total 2016 acreage planted to all crops is up almost 5 million acres, compared to 2015 total crop acreage.
Another interesting aspect of the June 30 USDA Report was the level of biotechnology varieties that are now being used by U.S. farmers, especially given the current discussions in Congress regarding potential GMO labeling legislation. The report showed that the crop acreage planted biotech varieties in 2016 will be 92 percent of the corn acreage, 94 percent of the soybean acreage and 93 percent of the cotton acres, which is virtually unchanged from 2015.
Many areas of the Upper Midwest have struggled with excessive rainfall during June, and now some areas of the Corn Belt have become quite dry, as we head into the critical tasseling and pollination period for corn. In the regular Monday Crop Progress Report on June 27, USDA rated 75 percent of the corn in the U.S. in good/excellent condition, including 81 percent of the corn in Minnesota, 79 percent in Iowa and 73 percent in South Dakota. USDA rated 72 percent of the nation’s soybeans in good/excellent condition, as of June 27, including 77 percent in Iowa, and 75% in both Minnesota and South Dakota. USDA is currently projecting 2016 national average yields at 168 bushels per acre for corn and 46.7 bushels per acre for soybeans, which compares to final U.S. average yields in 2015 of 168.4 bushels per acre for corn and 48 bushels per acre for soybeans.
Grain stocks recap
The USDA Quarterly Stocks Report on June 30 showed total U.S. corn stocks on June 1 at 4.72 billion bushels, which compares to 4.45 billion bushels a year ago. The June 30 stocks estimate was well above the pre-report estimates of most grain analysts, which was another factor in the corn market decline following the report. July corn futures on the Chicago Board of Trade (CBOT) closed at $3.58 per bushel on June 30, and December 2016 new-crop corn futures closed at $3.71 per bushel, both of which were at their lowest levels since early spring. Local cash corn prices in southern Minnesota on June 30 were $3.10-3.25 per bushel for 2015 corn, and just slightly above that level on forward contracted 2016 corn. This 2016 corn price level is well below the cost of production for most corn producers in the Midwest.
The June 30 USDA Quarterly Stocks Report showed total U.S. soybean stocks on June 1 at 870 million bushels, which compares to 627 million bushels a year ago. The June 30 USDA soybean stocks estimate was slightly above the pre-report estimates of most grain analysts; however, this was somewhat offset by the lower than expected 2016 U.S. soybean acreage. July CBOT soybean futures closed at $11.75 per bushel on June 30, and November 2016 futures closed at $11.53 per bushel, both of which are near the highest levels of 2016. Local cash soybean prices in Southern Minnesota ranged from $10.75 to over $11.20 per bushel on June 30, and 2016 “new crop” forward contact prices were in a range of $10.60 to near $11.00 per bushel. This represents about a $2.00 per bushel improvement, compared to soybean prices in mid-April. If these stronger 2016 soybean prices hold, it will certainly help offset some of the negative impacts of the current downtrend in the 2016 corn market.