Trade sees U.S.D.A. acreage estimates as too high
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The U.S. Department of Agriculture surprised much of the trade with higher-than-expected corn and soybean planted area estimates in its June 28 Acreage report. The department said it would re-survey some states for soybean planted area because of planting delays caused by wet spring weather, adding another degree of doubt to the numbers. Still, the U.S.D.A. and the trade must work with the current estimates until revisions may be made later in the season, and keep a close eye on weather and crop condition ratings in the meantime.
Area planted to corn in 2013 was estimated at 97,379,000 acres, up 97,000 acres from the U.S.D.A.’s March Prospective Plantings report, up 224,000 acres from 2012 and the highest since 102 million acres in 1936. Corn area for harvest was estimated at 89,135,000 acres, up 1,760,000 acres, or 2%, from a year ago when abandonment was an unusually high 10% due to the severe drought.
The corn planted area was well above the average of trade expectations of 95,340,000 acres. Prior to the Acreage report, some traders and analysts said they thought at least 2 million acres intended for corn would go unplanted, or be switched to other crops, because of the weather delays that pushed planting well past dates for optimal yields across much of the Midwest. But the U.S.D.A. noted 43% of the crop was planted during the week of May 13-19, matching the record pace for progress in a week first set May 4-10, 1992.
But planted area was down a combined 1,600,000 acres in 7 of the 10 largest corn producing states, with three states posting a combined increase of 550,000 acres. The largest area increases came in what may be considered non-major corn states, such as Texas with a gain of 550,000 acres (not one of the top 10 states).
While corn tends to dictate direction of other markets, including soybean and wheat, it’s the soybean number that may be most in question this year, especially with the U.S.D.A. re-survey, results of which likely won’t be known until the Aug. 12 Crop Production report. The U.S.D.A. soybean planted area actually was below the average trade pre-report estimate of 78,024,000 acres.
Soybean planted area was estimated at a record 77,728,000 acres, up 602,000 acres, or about 1%, from March intentions and up 530,000 acres, or less than 1%, from last year, the U.S.D.A. said. Area for harvest was estimated at a record 76,918,000 acres, up 814,000 acres, or 1%, from 2012.
Despite the uncertainty about planted and harvested area, weekly crop condition ratings from the U.S.D.A. portend favorably for both corn and soybeans, especially compared with last year. In its latest Crop Progress report, the U.S.D.A. rated the corn crop in the 18 major states as 68% good to excellent and 8% poor to very poor as of July 7, significantly better than 40% good to excellent and 30% poor to very poor a year earlier when the effects of the drought were clearly in evidence. Soybean ratings in the 18 major states were similar with 67% rated good to excellent and 7% rated poor to very poor as of July 7, compared with 40% and 27%, respectively, last year.
The June 28 acreage numbers were key elements in the U.S.D.A. projecting record large 2013 corn and soybean crops in its July 11 World Agricultural Supply and Demand Estimates. The U.S.D.A. projected 2013 U.S. corn production at a record 13,950 million bus, down 55 million from 14,005 million bus as the June projection, but up 29% from 10,780 million bus in 2012 based on harvested area of 89.1 million acres and average yield of 156.5 bus per acre. The U.S.D.A. projected 2013 U.S. soybean production at a record 3,420 million bus, up 30 million bus from the June forecast and up 405 million bus, or 13%, from 3,015 million bus in 2012, based on harvested area at 76.9 million acres and an average yield at 44.5 bus an acre. The production numbers contributed to Sept. 1, 2014, carryover projections of 1,949 million bus for corn and 295 million bus for soybeans, both well above average trade expectations.
Despite the unexpected gains in corn and soybeans, the U.S.D.A. estimated total area planted to 21 major crops in the United States at 325,600,000 acres in 2013, down 720,000 acres from 2012 but up 10,457,000 acres from 2011. The three major U.S. crops of corn, soybeans and wheat make up 71% of the total planted crop area in the United States. There were some notable large acreage shifts from 2012 in several of the “lesser” crops, including oats planted area up 10%, sorghum up 15%, cotton down 17%, canola down 26% and peanuts down 33%.
While there is uncertainty about how many acres of corn and soybeans may have been planted, there appears to be somewhat better agreement on the favorable weather outlook for the remainder of the growing season. Still, new crop corn and soybean futures prices posted solid gains last week on renewed weather concerns, especially in western areas of the Corn Belt. Through July 11, December corn futures were up 35¾c a bu, or 7%, from the prior Friday, and November soybean futures were 62½c a bu, or 5%, for the week.
The first survey based 2013 corn and soybean crop production forecasts will be released by the U.S.D.A. on Aug. 12.