PF Reaction: Muted Reaction to USDA Reports

Posted on Tue, 03/31/2020 - 11:11

Market Reaction

Ahead of USDA's reports, corn futures were trading around 2 cents lower, soybeans were 2 cents lower to a penny-plus higher, wheat futures were fractionally to 6 cents higher with HRW contracts leading gains and cotton futures were 5 to 40 points higher.

In reaction to the reports, corn futures are trading 1 to 4 cents lower, soybeans are 1 to 4 cents higher, and wheat futures are still fractionally to 6 cents higher, with the HRW market leading gains. Cotton futures have slumped 8 to 100-plus points.

 

Prospective Plantings Report

Corn: 96.990 mil. acres; trade expected 94.328 mil. acres
— compares to 89.700 mil. acres in 2019
Soybeans: 83.510 mil. acres; traders expected 84.865 mil. acres
— compares to 76.100 mil. acres in 2019
All wheat: 44.655 mil. acres; traders expected 44.982 mil. acres
— compares to 45.158 mil. acres in 2019
Other spring wheat: 12.590 mil. acres; traders expected 12.631 mil. acres
— compares to 12.660 mil. acres in 2019
Durum: 1.290 mil. acres; traders expected 1.512 mil. acres
— compares to 1.339 mil. acres in 2019
Cotton: 13.703 mil. acres; traders expected 12.700 mil. acres
— compares to 13.738 mil. acres in 2019

Note: USDA’s survey work for March planting intentions was conducted the first two weeks of the month and are as of March 1. A lot has changed over the past month, so these figures are just a benchmark from which to add or subtract acres. Based on price action and other factors over the past month, the corn and cotton markets have given back some (maybe quite a few) acres and soybeans have picked up some acres. As always, weather, prices and other factors during spring will help determine actual planted acreage.

March planting intentions for corn are up 7.29 million acres from last year and 2.662 million acres above the average pre-report estimate, according to USDA. Intended corn acres are around 2.8 million acres greater than our early March survey indicated.

Farmers intend to plant more acres in 10 of the 12 top corn producing states in 2020. Corn planted acres are expected to rise in Illinois (up 800,000 to 11.3 million), Indiana (up 800,000 to 5.8 million), Iowa (up 600,000 to 14.1 million), Michigan (up 500,000 to 2.5 million), Minnesota (up 600,000 to 8.4 million), Missouri (up 400,000 to 3.6 million), Nebraska (up 400,000 to 10.5 million), Ohio (up 900,000 to 3.7 million), South Dakota (up 1.65 million to 6 million) and Wisconsin (up 100,000 to 3.9 million). Corn acres are expected to decline in Kansas (down 100,000 to 6.3 million) and North Dakota (down 300,000 to 3.2 million).

USDA’s March plantings intentions for soybeans are up 7.41 million acres from last year but 1.355 million acres less than the average pre-report trade estimate. Intended soybean acres are around 300,000 acres less than our early March survey indicated.

Compared to last year, soybean acres are expected to be up in all of the top 13 production states except for Indiana, where farmers intend to plant the same number of acres (5.4 million). Acreage gains are expected in Arkansas (up 250,000 to 2.9 million), Illinois (up 550,000 to 10.5 million), Iowa (up 100,000 to 9.3 million), Kansas (up 450,000 to 5 million), Michigan (up 440,000 to 2.2 million), Minnesota (up 550,000 to 7.4 million), Missouri (up 700,000 to 5.8 million), Nebraska (up 200,000 to 5.1 million), North Dakota (up 1 million to 6.6 million), Ohio (up 500,000 to 4.8 million), South Dakota (up 1.9 million to 5.4 million) and Wisconsin (up 200,000 to 1.95 million).

Farmers indicated to USDA they intend to plant 70,000 fewer acres to other spring wheat this year, with intentions coming in 41,000 acres less than the average pre-report estimate. Other spring wheat planting intentions are around 100,000 acres more than our early March survey indicated.

Compared to last year, other spring wheat acres are expected to decline in North Dakota (down 600,000 to 6.1 million) and Minnesota (down 100,000 to 1.35 million). Spring wheat plantings are expected to increase in Montana (up 400,000 acres to 3.3 million acres) and South Dakota (up 210,000 acres to 850,000 acres).

USDA data indicates March durum planting intentions are down 49,000 acres from last year and 222,000 acres below the average pre-report estimate. Intended durum acres are far lower than our early March survey indicated at 2.4 million acres.

USDA’s March cotton planting intentions are down only 35,000 acres from last year and roughly 1 million acres more than traders expected.

Cotton plantings are expected to rise 269,000 acres in Texas to 7.313 million acres and decline 100,000 acres in Georgia to 1.3 million acres.

Total acres intended to be planted to the 19 principal crops are estimated at 319.1 million acres, up around 16.5 million acres from last year, which is not a surprise given the roughly 20 million acres of prevented plantings last year. Total principal crop acres are estimated to be down around 200,000 acres from the 2018 growing season.

 

Quarterly Grain Stocks Report

Corn: 7.953 billion bu.; traders expected 8.125 billion bu.
— compares to 11.402 bil. bu. on Dec. 1; 8.613 bil. bu. on March 1, 2019
Soybeans: 2.253 billion bu.; traders expected 2.241 billion bu.
— compares to 3.258 bil. bu. on Dec. 1; 2.727 bil. bu. on March 1, 2019
Wheat: 1.412 billion bu.; traders expected 1.432 billion bu.
— compares to 1.841 bil. bu. on Dec. 1; 1.593 bil. bu. on March 1, 2019

Total corn stocks came in 172 million bu. below the average pre-report trade estimate. Corn stocks in all positions on March 1 were down 8% from year-ago. Of the total, 4.454 billion bu. were stored on-farm, down 13% from year-ago. Off-farm stocks of 3.499 billion bu. were up slightly from year-ago. Implied disappearance in the second quarter of the 2019-20 marketing year was 3.45 billion bu., up 3.9% from year-ago.

Total soybean stocks came in 12 million bu. above the average pre-report trade estimate. Soybean stocks in all positions on March 1 were down 17% from year-ago. Soybean stocks on-farm of 1.012 billion bu. were down 20% from year-ago and off-farm stocks of 1.242 billion bushels were down 15% from year-ago. Implied disappearance in the second quarter of the marketing year totaled 1 billion bu., down 1% from the same time last year.

Total wheat stocks came in 20 million bu. below the average pre-report trade estimate. Wheat stocks in all positions on March 1 were down 11% from year-ago. On-farm stocks of 339 million bu. were down 8% from year-ago and off-farm stocks of 1.074 billion bu. were down 12% from year-ago. Implied disappearance of wheat in the third quarter of the marketing year was 428 million bu., up 3% from the same time last year. Durum wheat stocks are down 31% from year-ago at 51.5 million bushels.