April 3, 2017
On March 31,the USDA released its “Prospective Plantings Report”, as well as the “Quarterly Grain Stocks Report”. These were very highly anticipated USDA Reports, due to the uncertainty in grain prices in recent months, the potential for a significant increase in U.S. soybean acreage in 2017, and the likelihood of even larger increases in USDA estimated grain stocks in the coming year.
Typically, these late March USDA Reports are very critical to farm operators and grain traders because the reports tend to have a high impact on grain market prices in the Spring and early Summer. This is the time of the year when many farm operators try to sell remaining grain inventories from the previous growing season, as well as look for opportunities to forward price a portion of the anticipated crop for the current year. In a majority of years, corn and soybean prices usually reach their peak price from April until June, which is why the March 31st USDA Reports are so important.
Following are the key items from the March 31 USDA Reports :
Corn --- Indicated intended 2017 corn planted acres of nearly 90 million acres for 2016, which is a
decrease of 4 percent from the 94 million planted acres in 2016, but is still above the 88
million corn acres in 2015. The 2017 USDA corn acreage estimate was slightly below the
average grain trade estimate of just under 91 million acres. The highest U.S. corn acreage
recorded in the March 31 estimate was 97.2 million acres in both 2012 and 2013. The 2017
corn acreage is expected to decline in most major corn producing States.
The total U.S. corn stocks on March 1, 2017, were listed at over 8.62 billion bushels, which is
up about 10 percent, compared to the 7.8 billion bushels on March 1, 2016. The March 1st
USDA estimate was slightly above the grain trade estimates prior to the Report.
Soybeans --- Record soybean planted acres of 89.5 million acres are anticipated in 2017, which is an
increase of 7 percent from 83.4 million acres of soybeans in 2016, which was the
previous record acreage. The USDA projection exceeded the average grain trade estimate
by 1.3 million acres, and was above the highest grain trade estimate. The 2017 soybean
acreage is expected to increase or remain steady in 27 of the 31 major soybean producing
States, with twelve States expected to have record soybean acreage.
Soybean stocks on March 1, 2017, were listed at 1.73 billion bushels, which up 13
percent from 1.53 billion bushels on March 1, 2016, and compares to under 1 billion
bushels as recently as March 1, 2014. The March 1 soybean stocks estimate was toward
the high-end of the pre-report estimates by grain traders.
Wheat --- Intended total wheat plantings for 2017 are 49.6 million acres, which is down 8 percent
from the 2016 wheat acreage of 50 million acres, and has dropped 16 percent from 55
million planted acres in 2015. Significant declines in wheat acreage are expected in North
and South Dakota, Kansas, Nebraska, and Oklahoma.
Total wheat stocks on March 1, 2017, were listed at 1.66 billion bushels, which is up 21
percent from 1.37 billion bushels on March 1, 2016, but was close to grain trade estimates.
Cotton --- Intended U.S. cotton plantings for 2017 are estimated at 12.26 million acres, which is up 21
percent from 2016 acreage levels, and is at the highest level since 2012.
The State-by-State Prospective Plantings Report for 2017 is also rather interesting. Minnesota corn growers are expected to plant 8.0 million acres of corn in 2017, which is down 5 percent from the 8.45 million acres planted in 2016. Minnesota farmers are expected to increase their planted soybean acres by 9 percent in 2017 to 8.25 million acres, which compares to 7.5 million acres in 2016. Prospective plantings for 2017 in Iowa indicated 13.3 million acres of corn, which is down 4 percent from the 13.9 million acres planted in 2016. The 2017 planted soybean acreage in Iowa is estimated at 10.1 million acres, which is 6 percent above the 9.5 million acres in 2016.
Prospective corn planted acres for 2017 declined by 3 percent in Illinois and Nebraska, and declined by 4 percent in both North and South Dakota, while holding steady in Indiana and Ohio, compared to 2016 corn acreage. In addition to Minnesota and Iowa, USDA expects increases in 2017 soybean acreage of 500,000 acres or more in North Dakota, Nebraska, and Kansas. Other projected increases in 2017 soybean acreage are South Dakota at 4 percent, Indiana at 6 percent, and Illinois at 1 percent. North and South Dakota have increased their total corn and soybean acreage considerably in recent years. North Dakota is expected to have 3.3 million acres of corn and 6.9 million acres of soybeans in 2017, while South Dakota is projected to have 5.4 million acres of both corn and soybeans this year.
The March 31 USDA Grain Stocks Report indicated that as of March 1, 2017, there were over 4.9 billion bushels of corn and just over 668 million bushels of soybeans stored on farms in the U.S., which represents about 56 percent of the total corn stocks and 40 percent of the total soybean stocks. The March 1, 2017, on-farm grain stocks compare to 4.33 billion bushels of corn and 727 million bushels of soybeans in on-farm storage on March 1, 2016. According to the USDA Report, there were 770 million bushels of corn and 93 million bushels of soybeans in on-farm storage in Minnesota on March 1, 2017, along with 1 billion bushels of corn and 115 million bushels of soybeans in Iowa.
USDA does not survey the percentage of the bushels in on-farm storage that are forward priced for future delivery, as compared to bushels that are not priced. However, many private analysts feel that a much higher percentage of the corn bushels still in storage on March 1, 2017, may not be forward priced in 2017, as compared to other recent years, due to continued low market prices since harvest in 2016. The large amount of corn bushels in on-farm storage, much of which is probably not priced, will likely make the cash corn market trends in the next few months very important for 2017 farm income levels. The increased 2017 soybean acreage, as well as a rather large level of soybean stocks, is likely to put downward pressure on both the cash and “new crop” soybean prices in the coming months.
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