Bearish numbers from USDA June 28

By Doug Tenney, Leist Mercantile

Report highlights: Both corn acres and stocks higher than expected, corn down double digits.

Trade expectations today: This USDA Report Day consists of two reports, U.S. acres, and U.S. grain stocks. Corn stocks could be 600-800 million bushels above last year at this same time. U.S. acres of the three major crops of corn, soybeans, and wheat could increase minutely. Pay close attention to corn and soybean

If corn stocks are at or below the low end of trade estimates, it suggests two things. Domestic corn use is larger than previously reported, or second, the U.S. corn yield of 177.3 bpa from last year is too high. Note that if the corn yield is wrong, it likely does not get revised until the October WASDE Report. U.S. corn and soybeans have a marketing year from September to the following August. Wheat has a marketing year from June to the following May.

Not taking place today: The monthly USDA Supply and Demand Report (WASDE) along with World production and usage. However, note that grain comments today will easily reflect what traders are already expecting with the July 12 WASDE Report.

Also, there have been reports for several weeks of U.S. corn and soybean acres being flooded in the Dakotas and Minnesota. In addition, prevent corn acres could reach 1 million acres. None of those issues will be addressed with today’s acres report.

Following the noon USDA report release, corn down 15 cents, soybeans up 10 cents, and wheat down  cents. Just before the report was released, corn up 3 cents, soybeans up 9 cents, and wheat up 1 cent.

U.S. Grain Stocks as of June 1, 2024: corn 4.990 billion bushels, last year 4.103 billion bushels; soybeans 970 million bushels, last year 796 million bushels; and wheat 702 million bushels, last year 570 million bushels.  

Average trader estimates for June 1, 2024 stocks: corn — 4.873 billion bushels, soybeans — 962 million bushels, and wheat 684 million bushels.  

US planted acres of major crops: 91.5 corn million acres, last year 94.641 million acres; soybeans 86.1 million acres, last year 83.6 million acres; wheat 47.2 million acres, last year 49.575 million acres.

Average trader estimates for US acres: corn – 90.353 million acres, 90.036 million acres on March 28 Prospective Plantings Report; soybeans — 86.753 million acres, 86.51 million acres on March 28 Prospective Plantings Report; all wheat — 47.657 million acres, 47.498 million acres on the March 28 Prospective Plantings Report.

Grains have been in a free fall during the month of June. At mid-morning, using the September CBOT for corn and wheat, and using the August CBOT for soybeans: corn is down 32 cents, soybeans down 64 cents, and wheat down $1.23. For the week, corn is down 19 cents, soybeans down 8 cents, and wheat is unchanged for the week.  

Land areas in Minnesota and Iowa near the Upper Mississippi River have experienced above average rainfall during the past 4-7 weeks. Barge freight is up significantly due to barge tows moving fewer barges due to the high water. That additional rainfall is now making its way down river into Illinois with flooding taking place on the Illinois River.

Weather will be of major importance in the next three weeks with corn pollination taking place. Ohio experienced much above normal temperatures last week. One central Ohio producer this am commented on receiving only ½ inch of rain this month.

My concern is that if the La Nina pattern becomes more pronounced in the weeks ahead, it could result in the Ohio Valley taking the brunt of the heat during July along with below normal rainfall. In addition, that same pattern could provide the western Corn Belt with timely rains and better than average yields. Bottom line, it could result in 2 punches to the gut of producers, resulting in reduced production for Ohio corn and soybeans while prices for both deteriorate.

This is one of those rare moments in a lifetime when you want to be 100% wrong.

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