June 12 USDA report offers some surprises

This USDA report was a surprise when they did not make any changes to 2013 corn and soybean acres.

The report is considered a bearish report. Both U.S. corn and soybeans had no changes made with 2013 acres. The corn yield was reduced from 158 to 156.5 bushels per acre. No change was made with the 2013 soybean yield. In addition bearish numbers for soybeans appeared as both Brazil and Argentina had higher soybean production. After the report was released corn was trading 7 cents lower for old corn (2 cents lower before the report) and 15 cents lower for new corn (10 cents lower before the report.) Soybeans were trading 1 cent lower after the report, while trading 4 cents lower before the report. New soybeans were 16 cents lower after the report while at 17 cents lower before the report.

Today’s USDA supply and demand report would normally be a pretty boring event. But with all of the weather events affecting corn and soybean planted acres this spring, it is attracting much more attention. Prior to the report traders were looking for corn acres to be down 1.5 million acres from the March intentions while they expected soybean acres to increase 700,000 acres. Typically acres changes are not done with the June supply and demand report with the grain acres report just around the corner on June 28. In fact seeing lower ideas for corn and soybean acres with this report has just surfaced in the past week. USDA has increased soybean acres with the June supply and demand report three times in the past twenty years. Corn acres have been revised lower four times in the past twenty years. Most were expecting some acres changes for both corn and soybeans acres but had expected little changes to be made for corn and soybean yields.

Traders were looking for little changes with old corn and old soybean ending stocks. However, for 2013 corn they were expecting corn ending stocks to decline. Soybean ending stocks were expected to increase a small amount.

The market has devoted lots of time and energy to the wet weather which has affected corn acres in Iowa, Illinois, Minnesota, North Dakota, South Dakota, and Wisconsin. An informal survey from earlier this week suggested corn prevented planted acres could be near 2.5 million acres. This total will not be known until much later in the summer when USDA releases corn and soybean planted acres by state. Those numbers can then be compared to the March 29 planting intentions report from USDA.

Prior to the report traders were focused on four events that included acres, weather, cash movement of corn and soybeans, and the Goldman Sachs roll.  Since late April, December CME corn has had a trading range from $5.73 to $5.12. November CME soybeans have had a much larger range as they have traded from $13.33 to $11.86. Weather planting delays due to wet conditions have been a huge factor in moving prices away from these recent lows.

Several rain events are in the forecast for the Midwest over the next ten days with ideas that each of those could bring moderate to heavy rains during that time period. Weather and old crop movement will be keys in price direction for the next two to four weeks.

In just a little over two weeks on June 28, USDA will release their acres estimates of spring planted crops. Also, it will be a quarterly grain stocks report. The quarterly stocks reports have been very explosive for corn prices with up the limit or down the limit pretty common for the past 10 to 12 reports.

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