The USDA released its annual Acreage Report, which provided the markets with a more accurate idea of spring planting progress and what potential supply implications may be in store for the 2023 crop year. On the demand side, USDA also released its Quarterly Grain Stocks report, which shows usage rates between March 1, 2022 and June 1, 2022. These supply levels will change 2021/22 ending stocks and 2022/23 beginning stock levels in the July 2022 World Agricultural Supply and Demand Estimates report, which will be released July 12th.
USDA shocked the markets by forecasting higher soybean acres than corn for only the third time in history in its March 31st reports. It seems, however, that markets have accepted the new reality of higher input costs and lucrative alternative crop options to corn and soybeans.
Crop return margins are expected to be much tighter than the March 31st Prospective Plantings report estimated after planting season was delayed by cool and wet weather, forcing growers in the Upper Midwest and Northern Plains to abandon planting plans. Pre-report trade estimates suggested 89.9 million acres for corn and 90.4 million acres for soybeans.
Climatological conditions in the U.S. should be the biggest fundamental factor determining corn and soybean price action during July. Currently, those weather forecasts are looking mostly favorable for crop development and unfavorable for prices. Outside influences have been negative for agricultural futures so far, with crude oil futures weaker, the dollar stronger and U.S. stock index futures under renewed pressure from economic worries.
Overall, the report resulted in a rather muted market response. A slightly larger corn area at the expense of soybeans had been anticipated for some time so confirmation came as little surprise. USDA estimates corn plantings just 60,000 acres above the average pre-report trade estimate and up 431,000 from the Prospective Plantings Report at the end of March.
At 89.921 million, corn acres this year are down 3.436 million acres from year-ago. USDA says on June 1, 2022, there were still 4.027 million acres of corn left to plant. That compares to the June 1, 2021, unplanted total of 2.175 million.
Grain News on AgFax
Compared to March intentions, USDA sees more corn plantings in Iowa (up 100,000 acres), Minnesota (up 500,000), Missouri (up 100,000), Ohio (up 50,000), Texas (up 100,000) and Wisconsin (up 300,000). Corn acres fell short of intentions in North Dakota (down 600,000) and South Dakota (down 300,000). Corn acres were unchanged from the Prospective Plantings Report in Illinois, Indiana, Kansas, Michigan and Nebraska.
Soybean plantings are 2.121 million acres below the average pre-report trade estimate and are 2.63 million acres below acreage indicated in the Prospective Plantings Report. At 88.325 million, soybean plantings are up 1.13 million from year-ago. USDA says on June 1, 2022, 15.806 million bean acres were left to plant. That compares to 9.836 million unplanted bean acres on June 1, 2021. USDA’s June 1 bean planted acreage estimate is below the lowest pre-report trade estimate by 410,000 acres.
Compared to the March Prospective Plantings Report, soybean acres exceeded intentions in Illinois (up 200,000 acres). Bean plantings fell short of intentions in Arkansas (down 50,000 acres), Indiana (down 150,000), Iowa (down 100,000), Michigan (100,000), Minnesota (down 500,000), Missouri (down 200,000), Nebraska (down 100,000), North Dakota (down 1.1 million), Ohio (down 150,000), South Dakota (down 200,000) and Wisconsin (down 50,000 acres from March intentions). Bean plantings matched intentions in Kansas.
There was no big news for the market in the USDA report, which pegged U.S. all-cotton plantings about 180,000 acres above the average of trade expectations. Dry weather in West Texas is a supportive market factor along with an absence of rainfall in near-term forecasts. Cotton futures are up slightly following the release of the USDA report.
Rice futures are feeling pressure from weakness in other grain markets, despite a mildly supportive USDA acreage number. USDA pegged U.S. all-rice seedings at 2.343 million acres, below the average of trade expectations and down nearly 200,000 from last year. Rice futures are up 14 cents in the most-active September contract.
More on Cotton
A tightening global supply environment – as well as domestically– likely kept the pace for corn exports limited this year. Peak corn export season runs from late February to late June. High prices and a surging dollar also made U.S. corn a less attractive option for global buyers this year, especially as many countries struggle to navigate the growing dynamics of global food inflation.
Growing liquidation of the U.S. cattle herd is also a bearish demand signal for corn markets. The sector will likely continue to rely on expanding ethanol production to carry demand prospects through the summer months. And with expanded blending limits for the summer and consumers eager to get back to pre-pandemic travel activities.
Corn stocks in all positions on June 1, 2022 totaled 4.35 billion bushels, up 6 percent from June 1, 2021. Of the total stocks, 2.12 billion bushels are stored on farms, up 22 percent from a year earlier. Off-farm stocks, at 2.23 billion bushels, are down 6 percent from a year ago. The March – May 2022 indicated disappearance is 3.41 billion bushels, compared with 3.58 billion bushels during the same period last year.
Soybean markets are bracing for what looks to be the highest Q3 usage reading for soybeans on record. That volume is likely to be over a quarter higher than the same reading a year ago thanks to a record soybean crop last fall. Strong Q4 usage is the result of unseasonably high soybean export demand and expanding domestic crush production. If realized, it will likely be the largest Q3 usage reading for soybeans on record.
Rice News on AgFax
Soybeans stored in all positions on June 1, 2022 totaled 971 million bushels, up 26 percent from June 1, 2021. On-farm stocks totaled 331 million bushels, up 51 percent from a year ago. Off-farm stocks, at 640 million bushels, are up 17 percent from a year ago. Indicated disappearance for the March – May 2022 quarter totaled 960 million bushels, up 21 percent from the same period a year earlier.
Rough rice stocks in all positions on June 1, 2022 totaled 56.6 million hundredweight (cwt), down 10 percent from the total on June 1, 2021. Stocks held on farms totaled 5.87 million cwt and off-farm stocks totaled 50.7 million cwt. Long grain varieties accounted for 67 percent of the total rough rice, medium grain accounted for 32 percent, and short grain varieties accounted for 1 percent.
Milled rice stocks in all positions totaled 6.01 million cwt, up 15 percent from a year ago. Milled rice stocks were comprised of 4.22 million cwt of whole kernel rice and 1.79 million cwt of second heads, screenings, and brewers rice.