All winter long, there has been a lot of talk about how new-crop grain prices favored soybean acres this spring, and the bearish-leaning nervousness expressed in this week's soybean trade was palpable. Friday's estimate from USDA that a record-high 89.5 million acres of soybeans would be planted in 2017 was not a shock, but it certainly was a bearish disappointment to those hoping producers would not be so eager to switch from their more traditional tendency to stick with corn.
Please remember Friday's planting estimates are not actual plantings, but USDA's poll of producers' intentions in early March and the two are not always the same thing -- part of the mix will depend on spring planting weather. But if Friday's numbers are close to correct, the 90 million acre estimate for corn and 46.1 million acre estimate for all wheat means that roughly 6 million of the 8 million acres that corn and wheat drop will go to soybeans. The other 2 million acres are expected to go to cotton. In other words, the slightly profitable carrot that new-crop soybean prices have been dangling was apparently effective, and soybean prices are now set up to take one for the team in 2017.
Like DTN Senior Analyst Darin Newsom wrote in Thursday's USDA reports preview, I was one of those lonely club members with more interest in the totals of March 1 grain stocks. Corn, especially, I thought would come in less than expected as demand has been good in the first half of 2016-17, but that was not the case as all three stocks totals emerged a little more than expected.
Corn on hand of 8.616 billion bushels exceeded Dow Jones' survey estimate of 8.551 billion bushels and translated to record demand of 8.32 billion bushels in the first half of 2016-17. Soybean stocks at 1.735 billion bushels on March 1 translated to 2.79 billion bushels of demand in the first half of 2016-17, also a new record high. Wheat's 1.655 billion bushels was also a little more than expected for March 1 and reinforces USDA's bearish ending stocks estimate of 2.27 billion bushels for 2016-17.
When the trade returns on Monday, Friday's report details may be a bit hazy, but everyone will remember that this year's soybeans are in line for a record planting. It will be tough to shake the bearishness of that initial expectation. Corn and wheat prices may find price support a little easier to come by this year, but there is plenty we still do not know. Now, back to the studio where DTN Senior Ag Meteorologist Bryce Anderson has our latest weather...
Todd Hultman can be reached at email@example.com
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