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Interesting USDA Reports for June 2013

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The late June USDA Acreage and Grain Stocks Report is always highly anticipated because it becomes the first hard data after the March USDA Plantings Intentions Report to give an indication of crop production levels in a given growing season, as of June 1. Many times the June USDA reports can have a big impact, either upwards or downwards, on grain market trends. There was much anticipation for June 28 report this year, given the uncertainty surrounding crop planting in some areas of the Midwest, and the poor growing conditions in other areas of the U.S. 

The June 28 USDA Acreage Report showed total 2013 planted corn acres in the U.S. at 97.4 million acres, which is the highest number of planted corn acres since 1936, and marks the fifth year in a row that planted corn acres in the U.S. has increased. Interestingly, the June 28 report showed an increase of about 100,000 planted corn acres in the U.S. in 2013, compared to the USDA Planting Intentions Report in March. The 2013 U.S. estimated corn acreage compares to 97.2 million acres of planted corn in 2012. The USDA projections for U.S. planted corn acreage exceeded the average of major grain analysts by over 2 million acres, and even exceeded the highest private estimate by nearly 1 million acres.

Some grain marketing analysts and observers have questioned the numbers released by USDA in the June 28 Acreage Report. The biggest question is how USDA could justify the increase in actual planted corn acres in 2013, above the intended planted corn acres in March 2013, given the serious planting delays in many portions of the primary growing area in southern Minnesota, Iowa and Wisconsin. USDA did lower the intended corn planted acres by 300,000 acres in Minnesota, 200,000 acres in Iowa and 150,000 acres in Wisconsin, compared to the March planting estimates. However, those reductions in 2013 corn acreage were more than offset by increases in projected corn acreage in Nebraska, Texas and Michigan, compared to the March estimates. USDA did acknowledge that there about 3.4% of the intended corn acres were not planted on June 1, which would represent approximately 3.3 million acres. USDA does not plan any follow-up survey of U.S. corn acreage until harvest time, so no future adjustments in the planted corn acreage will occur in the coming months.

Another big question mark in the USDA report on June 28 is what percent of the planted corn acres will be harvested for grain in 2013. Typically, about 92% of the planted corn aces in the U.S. are harvested for grain, with the balance being used for corn silage, or being non-harvestable for various reasons. In 2013, USDA is projecting the corn acres to be harvested for grain at only 91.5%, with that half of one percent reduction representing approximately 487,000 less acres being harvested for grain this year, compared to normal. This would seem to indicate that USDA is recognizing some of the potential crop production problems that existed in early June in many areas of the Midwest.

The report listed 2013 planted soybean acres at just below 77.7 million acres, which is in increase of over 600,000 acres from the March 1 planting intentions, and compares to 77.2 million acres planted to soybeans in 2012. The USDA projections for increases in planted soybean acreage in 2013 were very similar to the average grain trade estimates. Most grain analysts expected corn acreage to decline and soybean acreage to increase in the June USDA Report, due to the major planting delays in portions of the Midwest. USDA will re-survey the 2013 planted soybean acreage in 14 States in early July, with results reflected in the August USDA report. The June 28 report pegged total 2013 U.S. wheat acreage at 56.5 million acres, compared to 55.7 million acres in 2012, and estimated 2013 cotton acreage at 10.25 million acres, compared to 12.3 million acres last year. 

 

Stocks Report

The June 28 USDA Quarterly Grain Stocks Report listed total corn stocks available on June 1 at 2.76 billion bushels, compared to 3.15 billion bushels in June 2012, with about 46% of that corn still stored in on-farm storage. This is the smallest amount of corn ending stocks on June 1 in 16 years, which has helped to keep cash corn markets fairly strong in recent weeks. The U.S. soybean stocks in the June 28 report were estimated at nearly 435 million bushels, which compares to soybean stocks of 667 million bushels on June 1, 2012. The soybean stocks on June 1 were at the lowest level in nine years, which has also helped maintain strong market prices for remaining 2012 soybeans that are in storage and are not yet priced.

New-crop 2013 corn and soybean prices have reacted in a much more bearish fashion to the crop acreage trends identified in the June 28 USDA reports. Chicago Board of Trade (CBOT) futures prices for December corn futures prices have dropped nearly 80¢/bu. from mid-June until early July, and closed at $4.91/bu. on July 5. This a new low price for the CBOT December 2013 corn futures contract, and was the lowest corn futures price thus far this year. The current spread between the July CBOT corn futures price and the December CBOT futures price is almost $2/bu., which could signal a drop in the cash corn market in the coming weeks. Local cash corn prices at most locations in southern Minnesota closed above $6.50/bu. on July 5, which compares to harvest-time new-crop cash bids for 2013 corn in the $4.50-4.60 range.

Near-term CBOT soybean prices have remained quite strong in recent weeks, reflecting the very tight supply of existing soybeans, with a closing price on July 5 of $15.88/bu. However, new-crop November CBOT futures for the 2013 crop have dropped by over $1/bu. since early June, and closed at $12.28 on July 5. Local cash soybean prices in southern Minnesota on July 5 closed near $15.50 for cash soybeans, and in the $11.70-11.90 range for new-crop 2013 soybeans at harvest-time, which, again, is a very wide price spread.

 

Editor’s note: Kent Thiesse is a former University of Minnesota Extension educator and now is Vice President of MinnStar Bank, Lake Crystal, MN. You can contact him at 507-726-2137 or via e-mail at kent.thiesse@minnstarbank.com.

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