Seed Times- June pdf - Page 8



Will USDA Drop Corn acreage
by 3, 6 or 10 million?
June 2019
Article Sourced from Todd Hubbs
Uncertainty About Crop Acreage Looks To Remain In Place Through The Summer.
Corn futures prices rallied about $0.90 per bushel since the beginning of May.
The rally reflects expectations that planted
acreage will fall well short of March intentions and on yield concerns associated with
wide-ranging late planting.
Demand weakness continues to emerge in the
export market, but supply issues look to overwhelm any decrease in demand. The release
of USDA’s Grain Stocks and Acreage reports on
June 28 looks to set the tone for summer corn
prices.
The reduction in corn planted acreage by three
million acres and corn yield by 10 bushels per
acre in the June WASDE appears to be a harbinger of things to come this year. The June
estimate of planted acreage of corn is generally
expected to be far less than intentions of 92.8
million acres reported in March.
The only question remaining is the scale of
acreage loss. The magnitude of prevented
planting acres this year looks to eclipse the
previous record of 3.6 million acres in 2013 by
a wide margin. As of June 9, 14.5 million acres
remained unplanted in the 18 states reported
in the Crop Progress report. The amount of
prevented planted acreage in those estimates
remains uncertain, but the prospect of planting
more than 14 million acres of corn after June 10
seems daunting.
Additionally, some acreage may have been
switched to soybeans due to delayed corn plant-
ing over large areas of the Corn Belt. Recent
wet weather brings soybean acreage planting
into question as well. However, the prospect of
a new round of Market Facilitation Payments
provides a strong incentive to plant soybeans in
the second half of June if weather permits.
The June acreage estimate will probably not be
changed until FSA certified acreage data becomes available in October. The final acreage
estimate released in January tends to be less
than the June estimate.
Since 1996, the final estimate averaged 626,000
acres less than the June acreage report in years
when prevented planting acreage exceeded one
million acres. This year may see a substantial
drop from the June acreage estimate due to the
uncertainty about planting during the survey
period.
While the supply situation looks increasingly
supportive of corn prices, current levels of corn
use show weakness; particularly in the export
market.
The estimate of June 1 corn stocks will reflect
the recent decrease in consumption and reveal
the pace of feed and residual use during the
third quarter of the marketing year. The expected size of June 1 stocks can be calculated
based on consumption data that are currently
available and on the assumption that feed and
residual use is on pace with the USDA projection
of 5.3 billion bushels for the year.
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