US supply buffers thin with underwhelming corn, soya acres

FORT COLLINS, (Colo.) Analysts thought government data on Wednesday would show that US farmers significantly increased corn and soybean plantings from original plans, but that was not the case, and new-crop Chicago futures surged to end the month higher.

US corn and soybean stocks, especially as they relate to demand, have reached multi-year lows and the idea was that expanded plantings would help ease supply tightness. Market-watchers thought the historic spring futures rallies would entice farmers to ramp up acres, but the overall gains were a letdown.

Trade estimates present risk when the expectations are for something unprecedented or when there is too much consensus. On Wednesday, analysts expected combined corn and soybean acres to rise by a record amount from March intentions. None of them thought there was a chance for a reduction in corn and/or soy acres and all thought combined acres would safely reach a new record.

Corn plantings increased by 1.5 million acres over March to 92.7 million acres, below the expected 2.6 million-acre gain. The trade thought soybean acres would rise by 1.36 million, but they fell fractionally to 87.56 million. Combined corn and soy at 180.25 million acres missed 2017’s high by less than 100,000 acres.

The US Department of Agriculture’s statistics service publishes a surveyed harvested area estimate in its June plantings report, so the change in crop size for July’s supply and demand update from USDA’s World Board can be calculated.

There is not usually a justification for USDA to change its trend yields in July, so assuming that is the case, Wednesday’s harvested corn area combined with the projected 179.5 bushels per acre would yield a crop about 177 million bushels larger than the current peg. The change to soybeans is negligible.

This is significant because the average trade guess on corn acres could have added about 350 million bushels and the highest guesses would tack on nearly 700 million. USDA earlier in June pegged US corn ending stocks for 2021-22 at 1.357 billion bushels, up from 1.107 billion this year.

The average trade guess on soybean acres could have added around 70 million bushels to the crop, raising the 2021-22 carryout by 45percent from current projections. The carryout would have been close to doubling with the highest planting estimate.