Corn acres, supply up: USDA reports to impact prices

MCHENRY, Ill. — Corn and the farmers who grow it weren’t having a good day on June 28.

Two U.S. Department of Agriculture reports — the USDA planted acreage report and the USDA quarterly grain stocks report — both brought negative news for corn supplies and corn prices.

“Corn was hit with a double whammy. We found larger supplies of old crop than expected. On top of that, we had higher acres,” said Rich Nelson, chief strategist at Allendale Inc.

The June 28 planted acres report showed U.S. corn planted acreage, as of June 1, at 91.5 million acres. That number was an increase from the March 28 planting intentions report, which had 2024 corn acres estimated at 90 million acres.

“Let’s be very calm on the acres side and say there’s a midpoint in discovering acres,” Nelson said.

He cautioned that the June report is a waypoint, not a final destination.

“This is simply another part of an unfolding story. Yes, these are the acreage numbers we have to trade with right now, but they are not permanent or final,” he said.

As of June 1, farmers who participated in the USDA survey still were planting corn and soybeans.

The report mentioned that there still were 3.36 million acres of corn and 12.8 million acres of soybeans yet to be planted as of June 1.

That is more than the 2.5 million acres of corn and 8.2 million acres of soybeans that were remaining to be planted as of June 1, 2023.

Soybean planted acres estimates as of June 1 were 86.1 million acres, an increase of 3% from a year ago.

That number is in line with the March planting intentions report, which had soybean plantings estimated at 86.5 million acres, but lower than analysts’ pre-report estimates.

“We did drop acres a little bit and the trade expected a minor increase,” Nelson said.

All wheat planted area for 2024 was at 47.2 million acres, down 5% from a year ago. The winter wheat planted area estimates are 33.8 million acres, down 8% from a year ago and down 1% from March.

Major flooding in the upper Midwest and northern Corn Belt may not be enough to move the needle on supply much, Nelson said.

The affected areas make up approximately 8% to 9% of U.S. corn and soybean acreage, he said.

“Even if you zero out 20% to 30% of those acreage numbers, this is only giving a 2%, maybe on the high end, up to 3% hit on production. The problem we have is, assuming that does trim the total supply down a little bit here, we still are not changing the overall heavy supply story,” he said.

Long-term weather outlooks aren’t offering any encouragement either.

“July and August are the superstar months for determining U.S. corn and soybean yields. Right now, and over these next eight weeks, is really the superstar story for determining yields,” Nelson said.

“We did have some long-term forecasts suggesting off and on dryness. We have had above-normal temperatures and that is still in place.

“The issue is that in the very short term, we have not yet seen the one or two week forecasts begin to incorporate that belief of dryness. In fact, we still are looking at above-normal moisture.”

That adds up to no foreseeable, significant threats to yields.

“We really need to drop corn and soybean yields roughly about 5% each to really see much of a change in price here and, so far, that story is not yet here,” Nelson said.

The other weather story that could drive prices is thousands of miles south and at least two to three months away.

“One story we have in front of us to maybe disrupt this large supply story is still two, three, four months away and that will be the impact on South America,” Nelson said.

South America-based weather and El Niño prediction agencies, along with the U.S. National Oceanic and Atmospheric Administration, are predicting a switch to a La Niña weather pattern in the second half of 2024.

A La Niña pattern in South America means heavier-than-normal rains in Brazil and drought for Argentina and Chile.

“The next phase we will have to look at will be the discussion for La Niña and its impact on South America. They will be planting for South America in the fall, going through yield development December through February,” Nelson said.

“Usually, La Niña is not a match up for Brazil yield hits. La Niña can be a match up for Argentina.”