Key Takeaways:
- USDA releases June Acreage and Quarterly Stocks reports Tuesday, June 30 at 11 a.m. CT — one of the year’s most market-moving events
- Corn acres expected at 94.99 million (down 346K from March) due to Iran War fertilizer price spikes and wet weather
- Soybean acres projected at 85.37 million (up 669K from March) as farmers shift plantings
- Corn stocks forecast at 5.41 billion bushels — highest since 1988, up 16% year-over-year
- Historical price patterns: November soybeans average 12¢ gains post-report; December corn averages 6¢ losses
Tuesday will bring one of the most anticipated and potentially hectic trading days of the year for corn and soybean markets when USDA releases its June Acreage report alongside its latest Quarterly Stocks report.
Anticipation around acreage is running particularly high this year as a result of fluctuations in fertilizer prices as a result of the Iran war. Excessively wet weather in parts of the Corn Belt may also leave doubt about the weather will offer the final word. Also fresh in mind for producers and traders are the large acreage adjustments made well after last year’s June 30 report, which served to further rattle faith in USDA data.
Why Tuesday’s report matters
The acreage and stocks data will both be released at 11 a.m. CT on Tuesday. The acreage report provides the public with an update to the agency’s estimates of acres planted to over 20 different row crops after a majority of crops are in the ground, as opposed to the more forward-looking Prospective Plantings report issued in March each year. The Acreage report is typically seen as one of the more significant market moving events of the year, since the figures constitute one half of the production equation, with attention then turning more towards forecasting yields after the acres are set.
Surveys find analysts expecting USDA to knock back corn acres from their March 31 Prospective Plantings estimate, but not to the degree that had been floated around in the trade early this spring as fertilizer costs spiked as a result of the Iran War and the closure of the Strait of Hormuz.
A Reuters survey found analysts, on average, look for planted corn acres to come in at 94.992 million, down 346,000 acres from the March 31 estimate of 95.338 million. Soybean acres are seen at 85.369 million acres, up 669,000 from the March estimate of 84.7 million.
Acreage shifts are normal — but how much?
History shows that soybeans typically see the largest change from the March report. In absolute terms, acres shift 1.39 million acres on average since 1986. The direction they shift is nearly evenly split over the last 40 years, with 23 instances showing an increase and 17 a decrease. Corn sees slightly less volatility on average, and since 1986 sees an average change of 1.02 million acres from the initial forecast.
How markets typically react to June 30 data
Since 2000, soybeans are the only major commodity that sees price movement to the upside more often than to the downside following report day.
- On average, November soybeans end the following day 12 cents higher at close compared to the day before the report.
- Corn ends the day 6 1/4 cents lower on average, while SRW and HRW end 7 3/4 cents and 7 cents lower, respectively.
- Cotton favors the downside just slightly, closing lower 13 times, higher 12 times and unchanged once. Average price movement sees December cotton closing 13 points lower over the last 26 years.
The figures published on June 30 generally serve as the official acreage estimates used in other USDA reports, such as the World Agricultural Supply and Demand Estimates (WASDE), that impact market expectations through the summer. The National Agricultural Statistics Service (NASS) will cross-reference administrative data from the Farm Service Agency (FSA) in the September Crop Production report, where adjustments are usually made due to the more complete nature of FSA data. Last year’s late-summer adjustments were an anomaly, with the multi-million upward revision in corn acres the largest change from a June forecast in the agency’s history.
Don’t forget Grain Stocks
While acres receive the most headline attention, the quarterly Grain Stocks report, released concurrently with the Acreage report each year, also has the opportunity to drive price action.
Corn is likely to continue to struggle with relatively high ending stocks as end users continue to work through the record setting 17 billion bushels harvested last fall. Analysts expect corn stocks as of June 1 to be 5.414 billion bushels, the highest since 1988 and up 16% from this time last year.
Soybean and wheat stocks are also expected to be higher from year-ago levels, but to a much milder extent. Soybeans are expected to come in at 1.046 billion bushels, up 4% from year-ago, and wheat is estimated at 934 million bushels, up 9%.
