USDA Reports Preview

USDA's Acreage and Grain Stocks reports at the end of June have a history of surprises and big price moves. After bearish price tumbles in June, this year's surprise may be that much of the damage to corn and soybean prices has already been done. USDA will release its reports at 11 a.m. CDT Friday, June 29.

ACREAGE

Based on Dow Jones' survey of analysts, the average pre-report estimate for U.S. corn plantings is 88.4 million acres (ma) in 2018, up slightly from USDA's March estimate and down from 90.2 ma in 2017. This year's planting started slow in April, but with few roadblocks encountered in May, there is a chance that corn acres could be a little higher.

For soybeans, Dow Jones' survey expects USDA to estimate 89.8 ma planted in 2018, up from the 89.0 ma USDA estimated in March, but below last year's record high of 90.1 ma. USDA's three-crop planting total in March was 2 ma less than the same total in 2017, so there is room for higher planted acres in this June report. However, keep in mind that 900,000 more cotton acres in 2018 took some of that difference, so Friday's chances for higher-than-expected soybean plantings seem limited.

Dow Jones' survey of wheat plantings came in at 47.1 ma for 2018-19, only slightly less than USDA's March estimate, but up from the century low mark of 46.0 ma in 2017. Winter wheat acres are expected to be roughly the same as a year ago, at 32.7 million. Spring wheat acres are expected at 12.4 ma, which is down slightly from USDA's March estimate, but still a healthy boost from last year's 11.0 ma planting.

JUNE 1 GRAIN STOCKS

The importance of USDA's quarterly tallies of grain stocks cannot be overemphasized. They are the heart of fundamental analysis and the main check and balance on USDA's World Agricultural Supply and Demand Estimates (WASDE) estimates. Grain stocks reports have been known to shatter prior illusions of grain demand, and there is always a chance that will happen again Friday.

Dow Jones' survey of analysts expects 5.26 billion bushels (bb) of U.S. corn stocks on June 1. If true, that means 11.68 bb of U.S. corn would have disappeared in the first three quarters of 2017-18, slightly less than 11.72 bb of disappearance a year ago. Because of this year's drought in Argentina and dry weather in Brazil, there is a chance that grain stocks will be lower than expected.

For soybeans, the outlook is more bearish, thanks to last fall's record U.S. soybean harvest, Brazil's record harvest in early 2018 and China's success in avoiding U.S. soybean purchases while trade tensions are high. Dow Jones' survey is looking for 1.22 bb of U.S. soybeans on hand as of June 1, up from 966 million bushels (mb) from a year ago.

One thing to keep in mind Friday is that even if USDA's count of soybean stocks comes in less than expected, buyers may still be reluctant to respond ahead of next Friday, July 6. On that day, China is set to enact a 25% tariff on U.S. soybeans. Because soybean prices have already suffered sharp declines in June, a bearish report on Friday could also see a muted price impact.

June 1 wheat stocks happen to mark the end of the 2017-18 season for wheat and are expected to total 1.10 bb, according to Dow Jones, slightly above the 1.08 bb predicted in the June WASDE report. It is difficult to argue that wheat stocks will be lower than expected when U.S. exports were such a struggle in 2017-18. If there is good, but not necessarily bullish news for wheat prices, Friday's report will probably not have much price impact, as traders are now more concerned about the new-crop season.

The anticipation of Friday's USDA reports will likely feel familiar to traders with dry mouths and tight guts in the minutes leading up to 11 a.m. CDT. However, the context of this year's reports are different with corn looking at the anticipation of lower world corn supplies and soybeans wondering if or when the world's largest soybean buyer will return anytime soon. Friday's reports will offer important clues for where prices go from here, but we also need to remember how far prices have already fallen.

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Editor's Note: Join DTN Analyst Todd Hultman at 12 p.m. on Friday, June 29, as he looks at USDA’s quarterly stocks numbers, quarterly demand and what it means for total demand. Acreage updates will also be discussed. To register, visit https://dtn.webex.com/…

QUARTERLY STOCKS (billion bushels)
	6/1/18	Average	High	Low	3/1/18	6/1/17
Corn		5.263	5.450	5.004	8.888	5.229
Soybeans		1.218	1.283	1.115	2.107	0.966
Wheat		1.098	1.200	1.042	1.494	1.181
ACREAGE (million acres)					USDA	USDA
	6/29/18	Average	High	Low	3/29/18	Final 2017
Corn		88.37	89.00	87.50	88.03	90.17
Soybeans		89.79	90.70	89.30	88.98	90.14
All Wheat		47.12	47.70	46.70	47.34	46.01
All Winter Wheat		32.72	33.10	32.60	32.71	32.70
Spring		12.41	13.00	12.00	12.63	11.01
Durum		2.02	2.10	2.00	2.00	2.31

Todd Hultman can be reached at todd.hultman@dtn.com

Follow him on Twitter @ToddHultman1

(BE/AG)

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