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BRIAN HOOPS

By Staff | Jul 10, 2009

On June 30, the USDA released the finial planted acreage report for corn, soybeans and wheat, as well as the quarterly grain stocks report. The report was a shocker for corn farmers and analysts as the USDA increased seeded corn acreage, while most of the industry believed that a wet spring would not only delay plantings but prompt some corn farmers to shift acres from corn to soybeans.

The USDA forecast corn planted area for all purposes in 2009 at 87 million acres, up 1 percent from last year but 7 percent below 2007. This is the second largest planted acreage since 1946, behind only 2007. This figure was well above the average trade guess of 84.16 million. This figure is also 1.05 million more than a year ago and 2.049 acres more than the March USDA estimate of 84.986 million.

Planting proceeded behind the normal pace, similar to last year, as frequent spring precipitation and cold temperatures slowed early season fieldwork and planting activities in the central and eastern Corn Belt, Ohio Valley and northern Great Plains. On May 10, corn planting was 48 percent complete, down 23 points from 5-year average.

In late May, however, dryer conditions allowed farmers to make rapid progress. Farmers reported that 97 percent of the intended corn acreage had been planted at the time of the survey interview compared with the 10-year average of 98 percent.

Quarterly grain stocks for corn were estimated 4.266 million, larger than the estimated 4.190 billion bushels.

This is 238 million bushels higher than last year’s stocks at this time of 4.028 billion bushels.

The USDA estimated soybean planted area for 2009 at a record high 77.5 million acres, up 2 percent from last year. This figure is 638,000 smaller than the average trade guess of 78.3 million. This is an increase of 1.76 million acres from last year when U.S. farmers seeded 75.72 million acres. Area for harvest, at 76.5

million acres, is up 3 percent from 2008 and will be the largest harvested area on record, if realized.

Compared with last year, planted acreage increased by 200,000 acres or more in Kansas, Mississippi, Missouri, North Dakota and South Dakota. The largest decrease is in Nebraska, down 400,000 acres from 2008, as many farmers switched to corn this year.

Quarterly grain stocks for soybeans are forecast at 597 mb, slightly larger than the guess of 586 mb. This is lower than last year’s stocks of 676 mb.

With the report’s release, the market focus will now be solely on weather during the pollination and pod-setting timeframe. With the largest soybean acreage and second largest corn acreage on record, a major weather problem will be needed to push values higher. Be prepared to sell rallies and raise protection levels on weather-related rally attempts.

Finally, the USDA estimated all wheat planted area at 59.8 million acres, down 5 percent from 2008. The 2009 winter wheat planted area, at 43.4 million acres, is 6 percent below last year but up 1 percent from the previous estimate. Of this total, about 31.4 million acres are hard red winter, 8.4 million acres are soft red winter, and 3.6 million acres are white winter. Area planted to other spring wheat for 2009 is estimated at 13.8 million acres, down 3 percent from 2008. Of this total, about 13.1 million acres are hard red spring wheat.

Durum planted area for 2009 is estimated at 2.56 million \acres, down 6 percent from the previous year. Wheat acres were forecast at 13.77 mb, well above the average trade guess of 13.102 million acres.

Last year’s seeded acres were 14.135 million acres. All wheat acres were pegged at 59.77 million, above the average trade guess of 58.33 million. Last year, U.S. farmers seeded 63.14 million acres.

Quarterly wheat stocks pegged at 667 million bushels, in line with estimates of 670 million bushels. This is a large increase compared to last year’s 306 mb.

Brian Hoops is president and senior market analyst of Midwest Market Solutions Inc. Midwest Market Solutions is a full-service commodity brokerage and marketing advisory service, clearing through R.J. O’Brien.

Corn analysis

Corn closed the week $.38 1/2 lower. The weekly export sales report showed net sales of 155,100 metric tons were up 68 percent from the previous week and 67 percent from the prior 4-week average.

Increases reported for Japan (369,600 MT, including 71,700 MT switched from unknown destinations, and decreases of 5,900 MT), South Korea (279,800 MT, including 117,900 MT switched from unknown destinations), Egypt (240,000 MT, including 60,000 MT switched from Syria), Taiwan (127,900 MT, including 58,000 MT switched from Japan and 57,900 MT switched from unknown destinations), Mexico (88,700 MT), Canada (36,400 MT).

For the marketing year, the U.S. has now exported 1.741 bb of corn compared to 2.363 bb last year. The U.S. needs to export 1.1 mb each week to reach the USDA forecast of 1.750 bb. As of June 28, the 2009 crop was rated at 72 percent good to excellent versus 61 percent a year ago. Iowa was rated 81 percent g/e, Minnesota was rated 82 percent g/e with Nebraska rated 82 percent g/e. Illinois was rated 58 percent g/e and Indiana was rated 62 percent g/e. Seasonal highs are in for the corn market and the uptrend line on the weekly charts have been broken.

Soybean analysis

Soybeans closed the week $.47 lower. The weekly export sales report showed net sales of 193,500 MT were up noticeably from the previous week and from the prior 4-week average. Increases reported for China (68,600 MT, including 58,000 MT switched from unknown destinations), Japan (67,100 MT, including 27,000 MT switched from unknown destinations), Taiwan (58,700 MT), Mexico (43,600 MT), and Canada (29,100 MT), were partially offset by decreases for unknown destinations (85,000 MT) and Syria (10,300 MT). Net sales of 250,100 MT for 2009/10 delivery were for unknown destinations (125,000 MT), China (120,000 MT), Guatemala (4,100 MT), and Barbados (1,000 MT). For the marketing year, the U.S. has now exported 1.251 bb of soybeans compared to 1.126 bb last year. The U.S. now has to export an average of 0.1 mb each week to meet the USDA forecast of 1.250 bb.

Planting progress is now reaching completion, except for areas in the eastern belt that will double crop soybeans after harvesting winter wheat. The USDA rated the soybean crop, as of June 28, at 68 percent g/e, 10 percent higher than last year’s crop. Iowa is rated 78 percent g/e, Minnesota is rated 74 percent g/e, Illinois is rated 55 percent g/e while Indiana is 63 percent g/e.

Seasonal highs form this week and commercials are noted as holding a bearish net short position.

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