Wheat prices the last week of June finally brought smiles to producers. It has been a long wait as wheat prices earlier this year sunk to 10-year lows. World supplies have been building for years, not helping prices at all. Commodity funds have been short wheat since mid 2016 as they built a huge short position. Several new records were set along the way as that short position reached 151,000 contracts last October. This year, U.S. wheat acres are at the lowest level in over 100 years. Many producers have taken the extreme step of removing wheat from their rotation and instead planting just corn and soybeans. Wheat had the biggest price movement for several months when looking at the three major grains: corn, soybeans, and wheat.
For several weeks producers have been watching the drought conditions in the Dakotas as spring wheat acres were less than expected. Those drought conditions were huge as wheat prices rose 30 cents on June 30 with two USDA reports. That same day corn was up 10 cents and soybeans were up 26 cents. Without weather concerns on report day, corn would have been down 5 to 10 cents.
June 30 was a big day for USDA reports as the Grain Stocks Report and the Acreage Report were released. Corn acres in the U.S. came in at 90.9 million acres, up from the March 31 Planting Intentions Report of 90 million acres, and down from 2016 when 94 million acres were planted to corn. U.S. corn acres were down or unchanged in 38 states. Many had expected U.S. soybean acres to exceed U.S. corn acres for the first time in history. That was not the case as corn acres fell to 90.9 million acres while U.S. soybean acres increased to 89.5 million acres. That was a record number of U.S. soybean acres. It was a bearish report day for corn as corn acres were higher than expected along with the June 1 stocks of corn at 5.23 billion bushels. Corn stocks were up from last year by 11%. Soybean stocks were 963 million bushels, less than the trade had expected.
In summary, the June 30 reports were bearish for corn, while bullish for soybeans and wheat. Weather continues to dominate the news. Within minutes after the reports were released traders were once again fully locked onto weather events. That June 30 day the market was focused on then upcoming reports of 100 to 105 degree temperatures soon expected in North Dakota. That area has been a huge concern since mid-June as traders and producers alike were fearful that drought conditions in the Dakotas would spread to other parts of the Midwest. Corn and soybean weekly condition reports have been below levels seen in years past when the good and excellent totals would reach 80% or more in June and July. Instead, this year corn has ranged from 65% to 68% good and excellent into late June. Good and excellent totals on any given summer date do not translate well into a predictable U.S. corn yield. That continues to be the case. Many are already expecting the U.S. corn yield will not reach trend line yields of 170 bushels per acre. Some are already expecting the U.S. corn yield will be 166. All of the replanted corn acres that took place in Illinois, Indiana, and Ohio provide additional ammunition for a reduced corn yield this year.
It must be pointed out that normal summer weather typically leads to lower fall prices. Some are suggesting December CBOT corn could reach $3.20 and November CBOT soybean see $8.20. Corn pollination concerns will be with us through the third week of July. You can easily say weather this growing season for corn and soybeans has been anything but typical.