Posted on April, 4, 2024 at 09:25 am
The USDA “Prospective Plantings Report” that was released on March 28th projected a 4.9 percent decrease in 2024 U.S. corn acreage compared to a year ago, along with a 3.5 percent increase in 2024 soybean acreage from a year earlier. The USDA planting intentions numbers came in lower than the grain trade expected for corn and similar than trade estimates for soybeans.
The USDA “Quarterly Grain Stocks Report” was also released on March 28, which lists the estimated U.S. grain inventory as of March 1, 2024, for both “on-farm” and commercial grain storage. The USDA estimates for U.S. corn inventories came in below the average stocks estimates of the grain traders, while soybean inventories slightly exceeded industry expectations.
The USDA prospective planting acreage is based on survey data collected from about 72,000 crop producers in early March. Total U.S. crop acreage was listed at 313.3 million acres, which was down 6.3 million acres or 2 percent from 2023.
Most of that decline was due to low commodity prices and the extended drought conditions in the southern Plains States. The USDA estimates for intended 2024 U.S. corn and soybean acreage was viewed as rather “bullish” for “new crop” corn futures prices, meaning higher price expectations, and was viewed as mainly “neutral” for soybean futures prices on the Chicago Board of Trade (CBOT).
After the USDA planting intentions report was released on March 28, December 2024 corn futures closed up 16 cents per bushel and November soybean futures were basically steady.
Typically, these late March USDA Reports are very critical to farm operators and grain traders due to their impact on grain market prices in the Spring and early Summer months.
During these months, many farm operators try to sell remaining grain inventories from the previous growing season, as well as look for opportunities to forward price a portion of the anticipated crop for the current year. In a majority of years, corn and soybean prices usually reach their “peak-price” during the period from April until June, which is why these reports are so important.
Corn: The total U.S. corn stocks on March 1, 2024, were listed at over 8.35 billion bushels, which is an increase of 13 percent from a year earlier. The March 1st USDA corn stocks estimates were slightly below the average grain trade estimate. The report indicated that a significant number of farmers are still hanging on to their 2023 corn inventory, with nearly 61 percent of the total corn stocks being held in on-farm storage. One negative in the USDA grain stocks report was that implied corn usage from December, 2023 through February, 2024 was down about 12 percent compared to a year earlier. Many farmers are hoping that favorable corn stocks numbers, together with the expected reductions in 2024 U.S. corn acreage, will spur a rally in the cash corn market in the coming weeks. This would allow farmers to liquidate some of the large 2023 corn inventory that is still in on-farm storage.
Soybeans: Soybean stocks on March 1, 2024, were listed at just under 1.85 billion bushels, which is up 9 percent from a year ago but is still slightly below the total soybean stocks on March 1, 2022. About half of the total soybean stocks were held in on-farm storage. The total U.S. soybean usage from December, 2023 through February, 2024 was estimated at 1.16 billion bushels, which was down about 13 percent from a year earlier. The March 1 soybean stocks estimate came in slightly above the average estimate of grain traders. The higher levels of grain stocks, together with the expected increase in 2024 soybean acreage may limit any substantial increases in the CBOT soybean futures prices in the coming weeks.
Wheat: Total wheat stocks on March 1, 2024, were listed at just over 1.09 billion bushels, which is up 16 percent from March 1, 2023. Of that total, approximately 25 percent of the wheat stocks were held in on-farm storage. The implied U.S. wheat usage in the past quarter was 334 million bushels, which was down about 10 percent from the same quarter a year ago.
Corn and soybean market prices declined considerably in the past 12 months due to increasing supplies and reduced demand compared to previous years. Nearby CBOT corn futures closed at $4.42 per bushel on March 28 following the release of the USDA reports, which compares to $6.60 per bushel on Mach 31, 2023 following the release of the reports a year ago. New crop December corn futures on March 28 closed at $4.76 per bushel, compared to $5.66 per bushel a year ago on March 31. 2023. Nearby CBOT soybean futures closed at $11.91 per bushel following the USDA report on March 28, compared to $15.05 per bushel on March 31, 2023 and new crop November futures closed at $11.86 per bushel on March 28, compared to $13.20 per bushel a year ago.
The March 31st USDA report was based on producer surveys of planting intentions, as of March 1st; however, there is potential for these planting intentions to be adjusted slightly when final planting takes place. The lower cost of production for soybeans has likely encouraged the potential for more soybean acres in 2024; however, the potential for early spring planting in many areas of the Midwest could encourage an increase above the intended corn acreage. Any enhancement in corn prices in the coming weeks could also be favorable for increases in corn acreage. In the past twenty years, final corn acreage has increased above the prospective March 1 planting estimate in twelve years and decreased in eight years.
Source: Farm Forum