There was green on the screen following the release of the United States Department of Agriculture’s much-anticipated Prospective Plantings and Quarterly Grain Stocks reports on Wednesday.
Both corn and soybean acres came in below what the market was looking for, as well as what the USDA projected at its outlook forum last month.
“That really just helps shoot the markets higher,” notes Rejeana Gvillo, senior commodity analyst with Farmers Business Network (FBN). “That wheat number came in bigger but with that smaller corn acre total, that is really helping pull up wheat, and for the Canadian grower — canola is stronger right now, and acres are expected to be up, but with this low bean number, the market really has taken off.”
Looking at the numbers, when we think about the buying that China potentially has to do in 2021, it immediately begs the question: will there be enough soybeans?
“If you plug that 87.6 (million acres) into a balance sheet, while assuming normal harvested area totals, you are looking at a carryout of below the 200 million bushel mark for the U.S. So we are facing another year of a pretty tight supply situation. And really looking at the Prospective Plantings report — that’s the case across the board. Again, with winter wheat being the exception,” Gvillo says.
The corn acreage projection was also a lower number than what the market was looking for, at 91 million acres. Gvillo notes that again, if you insert those numbers — with normal harvesting area totals — into a balance sheet, there won’t be large surpluses by any means.
One of the only bearish numbers in the planting intentions report was the estimate for hard red winter wheat, with the number coming in higher than expectations.
“We were definitely surprised to see that market higher with that winter wheat acre total coming in, but my guess is corn is helping lift that market,” Gvillo explains. “Smaller corn supplies could translate to marginal boost and wheat feeding.”
Check out the full conversation between Rejeana Gvillo and RealAgriculture’s Shaun Haney, below: