Commentary
A day of a few surprises to end the week, month, and 2nd fiscal quarter. Corn futures fell to its lowest level since May 23 in the wake of a very bearish US acreage figure in my opinion. USDA estimated corn plantings at 94.096 million acres, up 2.1 million acres from March intentions and 2.243 million acres more than traders expected. That would be the third highest total since 1941It is my belief that having an extra 2.1 million acres of planted corn this year discounts a large measure of the fear of lost production due to the drought. The real killer in my view for the bull camp is the expectation for 2023 corn harvested acres of 86.3 million, which is a 9% jump from last year. The late-June shift in the weather pattern looks much more conducive to corn production than the flash drought that came before amid a very dry May in the Great Lakes production areas. Forecasts of changing conditions caused the price dive leading up to USDA’s Acreage and Grain Stocks Reports in my view.
As bearish as the corn news was, it was completely opposite for beans. Soybean plantings plunged vs. March intentions USDA estimated soybean plantings at 83.505 million acres, down 4 million acres from March intentions and 4.168 million acres less than traders expected. Soybean plantings dropped 3.945 million acres from last year. The planted acreage numbers will be debated, but this is what the market will trade. The margin for error for soybeans just went to zero in my view, while corn can afford to lose some yield this year, particularly with export demand weak. Volatility in the bean sector is at ludicrous speed if I can borrow a line from Mel Brooks’ Spaceballs movie. Next big report from USDA is the supply/demand report on July 12th. All eyes will be on the ending stocks calculation and how they account for the four million acre decline in planted acres.
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