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Tuesday's USDA Reports Lacking Bullish Hope

Todd Hultman
By  Todd Hultman , DTN Lead Analyst
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USDA will release its Acreage and June 1 Grain Stocks reports at 11 a.m. CDT Tuesday, June 30. (Logo courtesy of USDA)

Last year at this time, farmers had just experienced the worst planting conditions in modern history, and there was an uproar over USDA's estimate of 91.7 million corn acres. That will not be repeated this year as planting conditions were nearly ideal, giving USDA plenty of leeway for a better survey this time around.

USDA ACREAGE REPORT

Planting conditions were so good in the U.S. this year, by the end of May, 93% of the corn crop was in. In Minnesota and Iowa, planting was 99% and 98% complete, respectively. Even soybeans were 75% planted by the end of May, also ahead of their usual pace.

USDA's acreage estimates are the result of surveys taken in the first two weeks of June and, in spite of last year's controversy, the estimates have a fairly reliable track record for such a big undertaking. Over the past 20 years, the 90% confidence interval for corn plantings has been plus or minus 1.5% and for soybeans has been plus or minus 2.2%.

USDA's 97.0-million-acre estimate of corn planting intentions in March is widely regarded as too high this year, coming from questionnaires submitted before coronavirus-related issues hit corn prices especially hard in March and April. Dow Jones' survey of analysts expects Tuesday's estimate to come in at 95.2 million acres, up from 89.7 million acres a year ago. With a little help from yield and this year's start of good weather, 95.2 million acres could still produce a record-high 16.0-billion-bushel (bb) crop.

For soybeans, analysts expect USDA to estimate 84.8 million acres of plantings, up from 76.1 million acres a year ago. Assuming a 50.0-bushel-per-acre yield in 2020, 84.8 million acres of soybeans would produce roughly a 4.2 bb crop, which would also be close to a reasonable level of demand in 2020-21. The expected planting estimate is neutral for soybean prices.

Work has already been done to survey winter wheat acres, so Dow Jones' pre-report estimate of 44.7 million for all U.S. wheat acres should be close to Tuesday's number from USDA. Having suffered low prices for a long time and suffering again in early 2020, U.S. wheat plantings remain at their lowest level since records began in 1919. USDA expects a 1.877 bb wheat crop in the U.S. in 2020-21.

One thing to watch out for Tuesday is the possibility that total acres for all three crops will be higher than the 224.7 million estimated by Dow Jones' analysts. There will likely be some prevented plantings in the Northern Plains, but there is room for a modestly higher total. The recent peak of corn, soybean and wheat acres was 230.7 million in 2014.

JUNE 1 GRAIN STOCKS

USDA's estimates of June 1 grain stocks is one of the more practical reports USDA offers, and it is important because the accounting of inventories gives us a good check and balance against all the theoretical assumptions embedded in the monthly World Agricultural Supply and Demand Estimates (WASDE) reports.

However, if you look for bullish news in Tuesday's grain stocks estimates, you're going to be sorely disappointed, as this is the quarter that was hit hard by coronavirus fears and the shutdown of economic life that resulted. Any surprises in this category Tuesday are likely to be bearish.

Having braced yourself, Dow Jones' survey of analysts expects USDA to find 4.990 bb of corn stocks on hand as of June 1, down from 5.202 bb a year ago. If true, that will mean corn use through three quarters of 2019-20 is down 335 million bushels (mb) from a year ago. I have to say, given the hit corn has taken from exports and ethanol this year, corn could be in for a bearish surprise.

For soybeans, Dow Jones expects June 1 soybean stocks at 1.381 bb, down from 1.783 bb a year ago. If that estimate holds true, soybean use in the first three quarters of 2019-20 will total 3.101 bb, roughly the same as a year ago and among the lowest demand totals in seven years. With U.S. soybean shipments roughly even with last year, I tend to agree with the analysts on this one.

In wheat, USDA is expected to find 979 mb of U.S. wheat stocks on hand as of June 1, down from 1.080 bb a year ago. For wheat, the June 1 stocks are the same as ending stocks for 2019-20, and USDA just estimated 983 mb of ending wheat stocks in the June WASDE report for 2019-20. This is also a reasonable estimate, but given active exports toward the end of the season, there is a chance that wheat stocks could come in modestly lower than expected.

I realize I'm not offering any bullish hope in Tuesday's reports, but that is the kind of year 2020 is turning out to be.

Come join our webinar at noon CDT Tuesday, June 30, and find out how the reports went and what the numbers mean. I'll also gladly take questions. Register now at: https://dtn.webex.com/…

QUARTERLY STOCKS (million bushels)
6/1/20 Avg High Low 6/1/19 3/1/20
Corn 4,990 5,405 4,849 5,202 7,953
Soybeans 1,381 1,490 1,275 1,783 2,253
Wheat 979 998 925 1,080 1,412
ACREAGE (million acres) USDA USDA
6/30/20 Average High Low 3/30/20 2019-20
Corn 95.21 96.00 94.00 96.99 89.70
Soybeans 84.76 85.60 84.30 83.51 76.10
All Wheat 44.71 45.00 44.50 44.66 45.16
Winter 30.83 31.10 30.70 30.78 31.16
Spring 12.57 12.90 12.20 12.59 12.66
Durum 1.33 1.40 1.30 1.29 1.34

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

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Todd Hultman