USDA's Acreage and June 1 Grain Stocks reports will be released at 11 a.m. CDT Wednesday, June 30, and are known for their perennial impact on corn and soybean prices, at least for the day. In the past five years, December corn and November soybeans recorded double-digit price responses to USDA's June 30 reports in every year but 2018.
Many of us still shake our heads over USDA's high corn estimate in 2019, but the record does show that USDA's Acreage estimates have a 90% confidence interval of 1.7% over the past 20 years -- a fairly low margin of error. Even so, USDA tended to be too high in 16 of the past 20 years.
For soybeans, the 90% confidence interval is higher, at 3.0%, and the tendency has been to be too high in 13 of the past 20 years. USDA's habit of overshooting planting estimates for both corn and soybeans has been a sore spot for producers, contributing to lower-than-needed pre-harvest prices.
Corn and soybean planting estimates are sometimes revised in the October Crop Production report with the help of other supporting data, such as Farm Service Agency reports.
USDA's current planting estimate for corn stands at 91.1 million acres. This time around, many think that is too low given this year's high prices and drier planting conditions. Dow Jones' survey of analysts expects USDA to estimate 93.82 million acres of planted corn in 2021, the most since 94.0 million acres were planted in 2016. If true, corn plantings would be up from 90.82 million acres last year, and this suggests a 15.2 billion bushel (bb) corn crop, using a yield of 177 bushels per acre (bpa).
Dow Jones expects USDA to increase the current soybean planting estimate of 87.6 million acres to 89.15 million acres, the most since 89.20 million acres in 2018. The survey's estimate is up from 83.1 million acres last year and suggests a 4.4 bb soybean crop in 2021, based on a yield of 50 bpa. If true, that would be just enough to meet USDA's early demand estimate of 4.42 bb in 2021-22 and have no room for adverse weather.
For wheat, Dow Jones expects USDA to slightly lower the planting estimate from 46.4 million acres to 45.95 million acres, a small increase from last year's 44.3 million acres. The breakdown is expected as 33.05 million acres for winter wheat, 11.43 million acres for spring wheat and 1.52 million acres for durum wheat.
For those wondering about yield and this year's impact of drought, USDA's next production estimates will come in the WASDE report on July 12. Even with early drought problems in the northwestern U.S. Plains, USDA's corn and soybean yield estimates may not change much until the September WASDE report, when USDA conducts field surveys.
JUNE 1 GRAIN STOCKS
USDA's planting estimates tend to get the most attention from traders on June 30, but June 1 Grain Stocks are just as important and especially helpful for assessing demand, giving WASDE estimates a much-needed check on inventory.
Dow Jones' survey expects USDA to find 4.204 bb of corn stocks on hand June 1, significantly less than last year's 5.003 bb. If true, that will mean corn had record use of 11.923 bb in the first three quarters of 2020-21. At that pace, corn will need 3.097 bb of demand in the final quarter to hit USDA's ending stocks estimate of 1.107 bb, roughly the same level of demand seen in last year's final quarter.
For soybeans, Dow Jones expects USDA to peg June 1 soybean stocks at 795 million bushels (mb), a big drop from last year's 1.382 bb. If the survey is close, a record-high 3.90 bb of soybeans have been used in the first three quarters of 2020-21; 660 mb will need to be used in the final quarter to reach USDA's ending stocks estimate of 135 mb, the lowest fourth-quarter demand since 2016-17.
For wheat, Dow Jones' analysts expect USDA to find 858 mb of wheat stocks on hand as of June 1, 2021, slightly higher than USDA's 852 mb estimate of ending stocks in the June WASDE report. Whatever USDA says Wednesday, the new total will be down from 1.028 bb a year ago and will likely be the lowest in six years.
Because there is always uncertainty as to what USDA will say and this year's grain supplies are tighter, traders' responses could be volatile. Judging by the latest market clues, December corn shows little bearish concern about the planting estimate. Bull spreading in old-crop corn hints at the possibility of a lower-than-expected June 1 corn stocks. Old-crop soybean prices have been under the most bearish pressure, suggesting June 1 soybeans stocks could be higher than expected. As always, a surprise could be looming that the market is not currently anticipating.
Join DTN's webinar at noon CDT Wednesday, June 30. We'll talk about USDA's new estimates in light of supporting market information, what they mean for prices and answer any questions you might have.
Register now at: https://ag.dtn.com/….
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Todd Hultman can be reached at firstname.lastname@example.org
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