Posted on April, 2, 2025 at 07:27 am
Monday’s USDA planting intentions and quarterly grain stocks reports saw no major surprises on the agency’s forecast numbers. However, how the grain futures markets’ prices reacted to the USDA data dump, which is considered one of the most important batches of information of the year, provided some valuable clues for price action in the grain and cotton futures markets in the coming weeks and months.
To recap, the USDA prospective plantings report saw U.S. corn planted acreage at 95.326 million. The trade expected 94.361 million, compared to 90.594 million acres planted in 2024. For U.S. soybeans, USDA forecast planted acreage at 83.495 million. Traders expected 83.762 million acres, compared to 87.050 million acres in 2024. For all U.S. wheat, USDA forecast planted acreage at 45.350 million, whereas the trade expected 46.475 million acres, compared to 46.079 million acres planted in 2024. U.S. cotton plantings are seen by USDA at 9.867 million acres. Traders expected 10.189 million, compared to 11.182 million acres planted in 2024.
The USDA quarterly U.S. grain stocks report numbers were close to being in line with market expectations for corn, soybeans and wheat, and were not considered by traders to be markets-movers.
The USDA planted U.S. corn acres came in above the average trade estimate and up 5% from last year. Yet, May corn futures (ZCK25) prices rallied in the immediate aftermath of the report’s release at 12:00 p.m. Eastern on Monday, March 31. As of this writing on Tuesday morning, May corn futures were showing good follow-through buying strength. This price action is a classic case of “sell the rumor, buy the fact” in futures trading. Importantly, when a market rallies in the face of bearish fundamental news, it’s a solid sign of underlying strength in that market and indicates that more price upside is likely in the coming days, weeks or longer.
Veteran chart watchers also noticed that this week’s rally in May corn futures produced a technically bullish double-bottom reversal pattern on the daily bar chart.
Veteran grain traders also know that corn is arguably the leader of the grain futures sector. A rallying corn market would also be friendly for soybean and wheat futures prices.
The soybean (ZSK25) market bulls were disappointed that futures prices sold off modestly Monday afternoon when U.S. soybean planted acres were forecast by USDA at down 4% from last year. This is a classic case of a “buy the rumor, sell the fact” scenario that occasionally happens when a fundamental market event occurs which had been highly expected beforehand.
Soybean futures prices were posting moderate gains Tuesday morning, as bean traders were looking to King Corn for price direction.
All U.S. wheat (KEK25)(ZWK25) planted acres for 2025 are estimated by USDA at at 45.4 million. That’s down 2% from 2024 and would be the second-lowest all-wheat planted area since records began being recorded in 1919. Winter wheat futures responded to Monday’s midday data by posting moderate rallies and were seeing mild follow-through buying strength on Tuesday morning. More gains in wheat futures prices this week would be a good clue that the winter wheat futures markets put in at least near-term price bottoms last week. Look for wheat futures traders to watch the corn market for daily price direction in the coming weeks.
The USDA U.S. cotton (KGK25) planted area forecast is down 12% from last year. Upland area is estimated by the agency at 9.71 million acres, with American Pima area estimated at 157,000 acres. Cotton acres in Texas are forecast to decline by 456,000 acres, to 5.527 million.
Cotton futures prices posted modest increases Monday after the USDA data release but were showing solid gains Tuesday morning. If the cotton futures market can end the week with prices at or near the weekly highs, such would be a good clue the natural fiber has finally put in a major market low.
Source: The Globe and Mail