USDA corn acreage estimate a 'shocker'

The fear of an overly burdensome supply of corn dissipated Tuesday following another surprise in USDA’s crop acreage report.

USDA estimates area planted to corn in the U.S. this season totals just 92 million acres, up 3% from last year, but down significantly from pre-report estimates and USDA’s March projection of a monster 97-million-acre crop.

“The corn acreage number definitely stood out. The trade was dialed in at 95.2 million acres,” said Curt Kimmel, owner/commodity broker at Bates Commodities in Normal. “That (reduction in acreage) is pretty much a shocker.”

If the yield projection of 178.5 bushels per acre comes to fruition and demand remains steady for corn, the cut in acreage could take nearly a billion bushels out of new crop carryout, according to Karl Setzer, AgriVisor commodity risk analyst.

Or, if the yield average falls back near trend around 173 bushels per acre this season, carryout could decline by up to 1.5 billion bushels from pre-report estimates.

“In my opinion, and I don’t want to get too optimistic, I think this is a game changer in this market,” Setzer said.

The big surprise of lower than expected acreage, just the opposite of what happened in last June’s report, tripped some buy signals in the markets. Commodity funds were short as much as 300,000 contracts in recent weeks and lightened to 280,000 contracts prior to the report, Kimmel noted.

“For the first time in what feels like forever, we’ve got some positive numbers to work off of,” the broker said.

Corn acreage estimates increased by 400,000 acres compared to last year in Illinois (to 10.9 million acres) and Indiana, by 500,000 acres in Iowa and 300,000 acres each in Minnesota and Missouri. Corn acres declined in Kansas, Nebraska and North Dakota.

What happened to the extra 5 million acres of corn USDA projected in March? The analysts believe a number of factors had an impact.

“We had trade concerns and COVID-19 (that drove corn prices lower this spring) and April weather (that created some planting delays),” Kimmel said. “There were a lot of moving parts.”

USDA estimates soybean plantings at 83.8 million acres this season, up 10% from last year and up from the March estimate of 83.5 million acres. Bean acres were up or unchanged in 24 of the 29 estimating states compared to last year.

In Illinois, USDA pegs soybean plantings this season at 10.4 million acres compared to 9.95 million in 2019.

The positive news for soybeans came in the form of stocks in all positions at 1.39 billion bushels as of June 1, down 22% from last year. USDA pegged corn stocks as of June 1 at 3.03 billion bushels, up 3% from last year.

“That’s a significant decline in soybeans (stocks), even when we see big acres coming in,” Setzer said. “With demand forecast, we’re using our beans.”

Weather the rest of this season becomes a bigger factor now that the balance sheets tightened, the analysts noted.

“We don’t have a huge cushion for corn,” Setzer said. “We can’t afford a yield loss.”

USDA estimates all wheat acres total 44.3 million acres this season, down 2% from last year. If realized, it would be the smallest wheat area since records began in 1919. Old-crop wheat in all positions totals 1.04 billion bushels, down 3% from a year ago, as of June 1.