This is the Market Report with Brooks Schaffer of Palmetto Grain. Reach him at [email protected] or 843-540-4540.

The USDA quarterly stocks and planted acreage report is one of the biggest USDA reports of the year. The range of expectations was fairly narrow meaning most market participants thought they had a good idea of what USDA was going to show us. The numbers we got from USDA were very bearish for corn on both the old crop stocks and new crop acres. The acres were even above the highest guesses. So this is a double hit to the market. On the old crop, either we are using less corn than we thought or the crop was bigger than USDA was estimating or some combination of the two. This will most likely add some bushels to the old crop carryout and new crop carryin. Based on the demand pace we can see every week, exports and ethanol, we were expecting more demand, not less.

For the acres, USDA added 1.439 million acres of corn from their March estimate of intended acres. The market had been looking for just a very small increase so this was above even the highest guess. Now we can argue with this number all we want, and I too believe there are some big issues with this number, but it is the number that is going to be used for planted acreage. USDA will tweak harvested acreage but will not update this number until late fall. There have been some private estimates by seed companies and other stakeholders of corn acreage even below 90 million acres but 91.475 is the number the market will be using. It is also worth noting that the USDA acknowledges that 3.36 million acres of corn were still not planted at the time of the survey compared to 2.49 million acres last year. When you look at the location of the acreage pickup, much of the acres were in Minnesota and Iowa which have been under the deluges and historic flooding. Some of those acres have been planted and replanted multiple times. How many of those acres got planted is still an open question. 

On soybeans, stocks were slightly higher than the average estimate but very close to expectations. Soybean acreage were actually about 600 million acres less than what the market was expecting and below the March estimate. Beans initially rallied on the news but could not overcome the selling in wheat and corn. November soybeans held the $11 support level on friday but traded below it on monday only to come back and close higher. 

Corn sold off hard on Friday but closed off the lows. After the close we got the commitment of traders showing the funds continue to grow their short position in corn. Monday corn was up overnight but succumbed to additional selling throughout the day session but battled back to close near unchanged. We hope the selling is running out of steam now that the bearish news is priced in. The market has taken out all the risk premium for the growing season and we still have a lot of growing season left. 

Updated condition ratings came out at 4pm Monday. USDA rated the corn crop at 67% good/excellent down 2 points from last week. The market was expecting 69% and that compares to last week at 69% and last year at 51%. Soybean ratings were unchanged from last week at 67% good or excellent. The trade was looking for 66% and compares to 50% good/excellent last year.