Subscribe to receive top agriculture news
Be informed daily with these free e-newsletters
June 23, 2022
Next Thursday is one of the big USDA reports that the agricultural community gets psyched up for: planted acres and quarterly stocks. With ending stocks still historically tight, the information released on this report will likely set the price tone for the rest of summer.
Traditionally the price reaction on this report day can be dramatic; potentially leaving prices nearly limit up or limit down depending on the information received.
This year, with the delayed spring planting it will be interesting to see how the USDA pegs planted acres for corn. Currently the U.S. planted acres for corn are pegged at 89.5 million acres, with harvested acres at 81.7 million acres (approximately 91.3% of the planted acre number). Yield has already been adjusted lower to 177 bpa.
Let’s look at three different acre scenarios, assuming no change to yield, beginning stocks, or demand. This is important because ultimately traders will focus on perception of the ending stocks. If the perception is that ending stocks are getting larger, then prices tend to drop lower, and vice versa.
Should corn planted acres come in slightly lower at 89 million acres, then ending stocks would be down to 1.321 versus the current 2022-23 estimate of 1.4 billion bushels.
If planted acres come in slightly larger at 90.5 million acres, then ending stocks would be pegged at 1.565, and would then likely keep corn futures trading each and every weather forecasts throughout July to get a better handle on yield.
Should planted acres come in at 91 million acres, then ending stocks would swell to 1.648 billion bushels, comfortably larger than 1.4 billion bushels estimated now.
The showstopper on next week’s report might be the Quarterly Stocks number. For the past three years, the June 30 Quarterly Stocks number has trended lower than the previous year.
On last year’s June 30 report, the U.S. corn stocks as of June 1 came in just over 4 billion bushels, down from 5 billion bushels the prior year. As of this writing, I have not yet seen any pre-report estimates for next week’s report, however I can’t help but wonder if that number might yet again be smaller this year due to strong demand.
After recently talking with clients about old crop bushels on hand, most have very recently “sold out” taking advantage of near $8 cash corn prices or have less than 5% of their total production on hand.
With basis still so strong throughout the Midwest, it also makes me wonder what grain elevators or ethanol plants have on hand for corn in storage. If they had bushels available wouldn’t the basis levels be wider?
If quarterly stocks come in smaller than expected, that means on future USDA WASDE monthly reports, that the 2021-22 ending stocks number would need to be reduced, which then affects carry-in for the 2022-23 crop year, ultimately pointing to a still historic tight ending stock situation that is not improving. Prices would then likely trade in a volatile manner reflecting the most recent weather forecasts throughout summer months.
The June 30 report is coming up quick next week on Thursday, with the market headed into a three-day holiday weekend after that. Expect high volatility, potential dramatic price swings, and plenty of chatter about weather forecasts and crop conditions that will keep this market hopping.
Disclaimer: The data contained herein is believed to be drawn from reliable sources but cannot be guaranteed. Individuals acting on this information are responsible for their own actions. Commodity trading may not be suitable for all recipients of this report. Futures and options trading involve significant risk of loss and may not be suitable for everyone. Therefore, carefully consider whether such trading is suitable for you in light of your financial condition. No representation is being made that scenario planning, strategy or discipline will guarantee success or profits. Any decisions you may make to buy, sell or hold a futures or options position on such research are entirely your own and not in any way deemed to be endorsed by or attributed to Total Farm Marketing. Total Farm Marketing and TFM refer to Stewart-Peterson Group Inc., Stewart-Peterson Inc., and SP Risk Services LLC. Stewart-Peterson Group Inc. is registered with the Commodity Futures Trading Commission (CFTC) as an introducing broker and is a member of National Futures Association. SP Risk Services, LLC is an insurance agency and an equal opportunity provider. Stewart-Peterson Inc. is a publishing company. A customer may have relationships with all three companies. SP Risk Services LLC and Stewart-Peterson Inc. are wholly owned by Stewart-Peterson Group Inc. unless otherwise noted, services referenced are services of Stewart-Peterson Group Inc. Presented for solicitation.
The opinions of the author are not necessarily those of Farm Futures or Farm Progress.
senior market adviser, Total Farm Marketing by Stewart Peterson
Naomi specializes at helping farmers understand how to manage cash marketing needs and understand the importance of managing basis, delivery point considerations, cash flow needs and storage capacity. She earned her Bachelor of Arts in Political Science with a minor in Agriculture Business at the University of Wisconsin in Platteville. She has a Master of Science in Adult Education with an emphasis in Ag Economics from the UW-Platteville and a Master Certificate in Global Education, from the UW-Oshkosh.
You May Also Like
Current Conditions for
Enter a zip code to see the weather conditions for a different location.