Bullish corn and soybeans

By Doug Tenney, Leist Mercantile

Corn acres were below the low end of expected and corn stocks bigger than expected, but quickly erased with the low corn acres.

The market is focused with razor-edge attention on today’s USDA reports at 12 noon ET. Today there were two reports from USDA, Acreage, and Grain Stocks. The Acreage Report will detail U.S. planted acres in 2020 and Grain Stocks as of June 1.

June 1 corn stocks will be the key number for today. The acres theme for the past several weeks has been for corn acres to decline while soybean acres would increase in comparison to the March intentions numbers.

Here are the stocks numbers: corn 5.224 billion bushels, soybeans 1.386 billion bushels, and wheat 1.044 billion bushels.

U.S. 2020 acres: corn 92.0 million acres, soybean 83.8 million acres, and wheat 44.3 million acres. All three were below trade estimates.

Shortly after the noon release, corn was up 15 cents, soybeans up 21 cents, and wheat up 7 cents. Just before the report, corn was up 1 cent, soybeans up 5 cents, and wheat down 2 cents.

Corn, soybean, and wheat acres will be the main numbers within the Acreage report. Trader estimates are: corn, 95.207 million acres; soybeans, 84.716 million acres; wheat, 44.718 million acres. In March with the Planting Intentions Report, USDA projected corn at 96.99 million acres, soybeans 83.510 million acres, and wheat 44.655 million acres.

Last year for U.S. acres, corn was 89.7 million acres, soybeans at 76.1 million acres, and wheat 45.158 million acres. Last year with these reports, corn acres were larger than expected, sending it into a tailspin which never recovered in comparison to prices seen mid-June 2019. The acres confusion was from prevented planted acres. Many in the trade had suggested corn acres would be lower than the number published by USDA. December CBOT 2019 corn prices that day on June 28 closed down 19 ½ cents.

Grains stocks trader estimates are: corn 4.951 billion bushels; soybeans 1.392 billion bushels; wheat, 980 million bushels. Last year at this time, stocks were: Corn 5.202 billion bushels; soybeans1.783 billion bushels; wheat 1.080 billion bushels.

Remember that this report will not detail supply and demand tables or ending stocks for corn, soybeans, or wheat. However, the trade will be quick to fast forward to projecting production for each of these crops. Already in the back of traders’ minds are yield estimates at this date which suggest corn yields of 180 bushels and higher, along with a soybean yield of 51 bushels. In addition, some have suggested for weeks the U.S. corn production could easily reach the 16 billion bushel number for the first time in history. This is why you have already heard price projections for corn to reach a harvest low ranging from $2.60 to $3.00 for December CBOT corn.

This is a volatile time period for the next two weeks. Corn open interest on Monday was down 51,000 contracts. Funds are near record short corn and reduced their short positions on Monday. Further ideas of crop problems will have them peeling off more shorts if weather issues persist.

Crop ratings, along with rains or no rains and temperatures, along with demand and China sales, will be the price drivers over the next six weeks. Further hints of the U.S./China trade in jeopardy could easily outweigh weather and heat concerns into July.

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