More Corn in the USDA Planting Report Surprises Markets

USDA’s projection of 90 million corn acres was a surprise to the markets leading to double-digit gains after the report. Joe Camp with Commstock Investments tells SFN if the report holds true, it could lead to substantial changes in the balance sheet.

“Just in general, you’ve got to bring up this headline acreage number and realize the relief that it potentially provides the balance sheet. We’re looking at a lot riding on yield as always, and knowing that these acreage estimates can change drastically from here. There’s still now an outlook for ending stocks or carry out inventory going forward possibly declining here after this build up last season, and so that’s a bullish outcome in part potentially paves the way for some seasonal upside that we would normally expect into the planting season.”

One of the questions that came from the planting intentions report is more than six million fewer acres devoted to principal crops when compared to ’23. Camp says these factors will play out as we get to the next report at the end of June.

“We were surprised somewhat by a cotton acre not being up more than it was and not having sorghum acres up anymore. Those were two that missed in terms of estimates coming in and did not explain like we thought they would for any move lower on corn acres. It’s still a possibility again as the South rolls forward with this early harvest effort that there’s going to be attention paid to the higher cotton prices as of late and for the ongoing strength in sorghum prices here. I think that can take the edge off of corn acres or limit them from going a whole lot higher like we were surprised by last year.”

While it didn’t come as a surprise the quarterly grain stocks report demonstrated as of March 1, there were about a billion additional bushels of corn in the system compared to a year ago. Camp says if there are significant market moves in the coming months, they should be met by considerable farmer selling.

“That’s an important influence for this market to keep track of, especially when we talk about okay, seasonality of upside into the early season. You’ve got some incentive after the crop report for these hedge funds to cover additional shorts. But how will they run into farmer selling? That’s going to be what meters out this potential rally and how fast and far it can go.”

The reports came at both the end of the month and end of the quarter.