Markets react to bearish USDA reports

Peter McMeekin Grain Brokers Australia July 2, 2024

Harvesting in Indiana this week. Photo: Brian Scott

CHICAGO Board of Trade corn futures continued a fortnight-long bloodbath in last Friday’s trade, collapsing in response to the bearish planted area and June stock numbers released by the United States Department of Agriculture during the session.

USDA’s June Planted Acreage Report put the area planted to corn across the US this spring at 37.02 million hectares (Mha), almost 600,000ha higher than the March Prospective Plantings Report and 450,000ha higher than the average trade guess leading into the data release. The planted area estimates are based on responses received by the National Agricultural Statistics Service (NASS) from almost 64,000 growers surveyed between May 30 and June 16.

The total area is down 3.3 percent, or 1.28Mha, compared to last year, and is the eighth-highest corn area in the US since 1944. Compared with 2023, the planted area is forecast to be lower or unchanged in 31 of the 48 reporting states, and at 33.77Mha, the final area harvested for grain is expected to be down 3.6pc, or 1.24Mha. NASS did note that when surveyed last month, growers reported they still had 1.36Mha earmarked for corn, but yet to be sown, up from 1Mha in last year’s survey.

As of June 23, the condition of 69pc of the corn planted in the 18 states that account for 92pc of the total seeded area was rated good to excellent, down from 72pc a week earlier, but substantially better than the 50pc reported in the same week in 2023. Crop emergence was put at 97pc, up from 93pc a week earlier and just above the five-year average of 96pc.

By Friday’s close of trade, the July corn futures contract had closed lower in nine of the previous 10 sessions, setting a new contract low on Tuesday, having taken out the previous low set on February 23. Over the past two weeks, the contract has lost 13.3pc of its value, with more than a quarter of that rout in last Friday’s trade.

Wheat conundrum

The total area planted to wheat for the 2024 campaign is estimated at 19.12Mha, 950,000ha, or 4.7pc lower than 2023, and around 200,000ha lower than indicated in the March planting intentions. The big wheat surprise came with a contrarian move in the harvested area forecast. US farmers are expected to reap 15.7Mha, up from 15.1Mha last year; the seeded area is down, and the harvested area is up year on year.

At 13.68Mha, the area planted to winter wheat is down 7.9pc from 2023 and 1pc lower than the previous estimate back in March. Of this total, roughly 71pc, or 9.75Mha, is Hard Red Winter, 18pc, or 2.48Mha, is Soft Red Winter, and 11pc, or 1.45Mha, is White Winter.

The condition of this year’s winter-wheat crop was reported as 52pc good to excellent on June 23, up from 49pc a week earlier. Despite issues stemming from a lack of precipitation in key states, the moisture situation was far better than the past two drought-reduced crops. Harvest is well under way, with around 40pc of the crop in the bin as of June 23, up from 27pc a week earlier, and well ahead of the five-year average of 25pc.

This year’s spring wheat seeding estimate is 4.57Mha, up 1pc year on year. Of this total, around 4.3Mha is sown to Hard Red Spring. This year’s spring wheat crop was reportedly planted quite rapidly, despite the occasional rain delay, well respected for replenishing soil-moisture reserves. The spring wheat crop was rated 71pc good to excellent on June 23. US growers have increased the area planted to durum wheat in 2024 to almost 900,000ha, 29pc higher than last year.

Like corn, US wheat futures had a down day on Friday following the release of the USDA reports. However, the movement was minor compared to the journey since April 18. During April and May, the Russian wheat production estimates fell, and December futures rallied 27.6pc in the ensuing 27 sessions. With production then appearing to stabilise at around 80 million tonnes (Mt), the momentum changed dramatically. Over the next 18 sessions, the entire rally was erased, and Friday’s close was almost exactly where it began back in April.

Soybean rating well

On the soybean front, the USDA pegged this season’s planted area at 34.84Mha, up from 33.83Mha last year. This is around 150,000ha above grower indications in March, and almost 250,000ha higher than trade expectations. At the time of surveying, growers reported that a collective total of 5.17Mha assigned to soybeans this season remained unplanted, up significantly from 3.46Mha in the same report last year.

The harvested area is forecast at 34.5Mha compared to 33.33Mha in 2023. As of June 23, crop conditions were reported at 67pc good to excellent in the 18 states that account for 96pc of the planted area. This is down from 70pc a week earlier, but well above the same week last year, when the rating was just 51pc. Crop emergence sat at 90pc compared to 82pc a week earlier, and the five-year average of 87pc.

Higher corn wheat, bean stock

The USDA’s June 1 grain stock data was also bearish across the board. Corn stocks were pegged at 127Mt, 22.6Mt higher than the same date in 2023. Of that total, 77Mt was stored on-farm and 50Mt stored off-farm, up 37pc and 4pc respectively compared to 2023. The March-to-May disappearance, a measure of supplies moving through trade channels for domestic consumption, came in at 85.3Mt against 83.6Mt last year.

US wheat stocks of all classes came in at 19.1Mt, 23.3pc above the 2023 level of 15.5Mt. Almost 3.8Mt, or 20pc of those inventories, is held on-farm, with the balance of 15.3Mt held in off-farm positions such as mills, elevators, up-country warehouses, terminals, and processors. Disappearance across all wheat grades came in at 10.5Mt in the March-to-May quarter, up 4pc on the same period in 2023.

Soybean stocks in all positions on June 1 were reported at 26.4Mt, up 4.7Mt, or 21.8pc, compared to a year earlier, adding a bearish nuance to the bullish seeded area number. According to the USDA, off-farm and on-farm stocks currently sit at 12.7Mt and 13.7Mt respectively, up 44pc and 6pc compared to June 2023. Total disappearance in the three months to the end of May stood at 23.8Mt, down 2pc year on year.

It was an interesting end to the week, with a double whammy for corn pushing futures dramatically lower. Wheat took a sympathy pill, following corn down, and soybeans held a neutral stance. All three markets, particularly corn and wheat, now appear to be in oversold territory. With some global weather issues and production challenges yet to be resolved, the next few months may prove to be quite volatile across global grain markets.


Your email address will not be published. Required fields are marked *

Your comment will not appear until it has been moderated.
Contributions that contravene our Comments Policy will not be published.


Get Grain Central's news headlines emailed to you -