Corn and soybean futures prices hit limit-up restrictions after the USDA Prospective Plantings report showed a smaller-than-expected increase in acreage, and the Quarterly Stocks report underscored how tight grain supplies are.
The reports together place great pressure on good weather in the upcoming season to produce strong yields in order to rebuild stocks. Using Gro’s Yield Forecasts, new crop soybean supplies would be insufficient to meet current demand estimates for the year, and prices would have to rise to levels that ration demand. For corn, end-of-year stockpiles would fall to a nine-year low. Gro has long maintained the USDA’s old crop ending stocks estimates for 2020/21 are too high, based on increased domestic and export demand.
Farmers intend to plant a combined 178.4 million acres of corn and soybeans, up 2.8% from last year. Corn planted area is expected to increase less than 1%, and soybean area is forecast to increase 5%, the USDA survey shows.
Gro’s own Planting Intentions Model, released three weeks ahead of the USDA report, indicated soybean acreage would increase 6.6%. Gro’s state-by-state acreage forecasts were particularly accurate for both soy and corn in Minnesota and for corn in Iowa. Most analysts also expected farmer planting intentions would show greater increases, following months of rallying commodity prices.
Wheat also was a surprise, with farmers reporting over 1 million more winter wheat acres than in a survey from January. Yield, however, is predicted to be below last year as seen by Gro’s Hard Red Winter Wheat Model. Cotton intended planting area is little changed from last year.
The Quarterly Stocks report showed corn stocks fell 3.2% from a year earlier, underlining the strong demand for the grain. Soybean stocks dropped 30.6%. Strong US cash basis and inverted futures prices indicated very strong demand all quarter. Gro’s Futures Spread App can quickly chart and analyze price relationships.
Farmers still have time to increase acreage before seeds go in the ground. Gro users can follow market-price movements and weather-driven developments in April and May to stay ahead of the planting season, and daily updates from Gro’s Yield Forecast Models for corn and soybeans when the growing season gets underway. Gro users can also anticipate Chinese demand for US grains, by using Gro’s China Pork Demand Forecast Model, a leading indicator of pork demand and therefore prices of hogs, grains, and oilseeds.
This insight was powered by the Gro platform, which enables better and faster decisions about factors affecting the entire global agricultural ecosystem. Gro organizes over 40,000 datasets from sources around the world into a unified ontology, which allows users to derive valuable insights such as this one. You can explore the data available on Gro with a free account, or please get in touch if you would like to learn more about a specific crop, region, or business issue.