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USDA reports huge corn acreage, but prices soar as weather looms larger
Story Date: 7/2/2012
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Source: Rita Jane Gabbett, MEATINGPLACE, 6/29/12
USDA reported U.S. farmers planted 96.4 million acres of corn, the largest acreage since 1937 and a bit more than analysts were expecting, but concerns about what hot, dry weather will do to yields pushed corn futures prices higher this morning anyway.
Corn futures prices on the Chicago Board of trade were up over a dime a bushel to about $6.60 per bushel for July delivery.
Corn prices were also undaunted by the large planted acreage because USDA actually lowered its estimate of harvested acreage, expecting higher abandonment rates and silage use.
“Weather Trumps Acreage” was how BMO Capital Markets analyst Kenneth Zaslow headlined his analysis of the report.
“USDA's reports were largely benign as the increase in corn and soybean acreage relative to expectations was somewhat modest, particularly in light of the deteriorating yield outlook. Commodity prices likely will increase today as the macro environment (e.g., Europe) and weather outlooks trump the larger corn and soybean acreage,” Zaslow wrote in a note to investors. “The commodity price outlook likely will continue to be driven by weather (weather market), reflecting increased uncertainty of the corn and soybean production outlook.”
Grain Stocks
USDA reported corn stocks in all positions on June 1 totaled 3.15 billion bushels, down 14 percent from June 1, 2011 and below the 3.18 billion average analysts’ estimate, according to a poll by Dow Jones Newswire.
Soybeans stored in all positions on June 1 totaled 667 million bushels, up 8 percent from June 1, 2011 and above analysts’ average forecast of about 640 million bushels.
Nevertheless, soybean futures prices rose this morning by over 20 cents to about $14.88 per bushel.
As Stephens Inc. analyst Farha Aslam pointed out in a recent report, poultry producers will probably not be able to pass along the recent sharp rise in grain prices to consumers due to weak demand.
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