USDA Acreage Report Stuns Markets – Especially Soybeans

Significantly fewer soybean acres planted in 2023 triggers big rally for soybeans.

At a Glance

• Soybean acres fall severely short of analysts’ early estimates, with corn acres moving significantly higher
• All-wheat acres trend 9% higher year-over-year
• Corn, soybean and wheat quarterly stocks all faded lower

USDA’s June 30 Acreage Report caught everyone by surprise, but especially the soybean markets. USDA’s count of 83.5 million acres of U.S. soybeans planted in 2023 was so far off everyone’s radar that it sent nearby July 2023 futures prices as well as new crop November 2023 futures up over $0.70/bushel.

USDA also came in higher than expected on corn acres, with 94.1 million acres expected to be planted this spring, nearly a million more acres than the highest pre-report market estimate. Corn futures shed $0.15-$0.18/bushel (3%) soon after the news.

“Usually, the market doesn’t spend a whole lot of time on the Quarterly Grains Stocks reports and we got to see that play out in real time today,” according to Farm Futures grain market analyst Jacqueline Holland. “Usage data for all three commodities between March 1 and June 1, 2023, was much larger than the markets had been anticipating, which gave all three commodities a nice price bump. But then USDA released acreage data and all of my hopes and dreams for a bullish Quarterly Stocks Report flew out the window.”

Acreage surprises

USDA’s new estimate for corn acres shocked analysts after jumping 6% higher year-over-year to 94.1 million acres – an increase of 5.52 million acres versus 2022. That was also more than 2 million acres above the average trade guess of 91.853 million acres. It’s also the third-most corn plantings since 1944.

In contrast, USDA lowered U.S. soybean acres by 5% versus 2022, with just 83.5 million acres. Acreage is steady or lower in 21 of the 29 estimating states. It was also noticeably below the average trade guess of 87.673 million acres.

“It’s also worth pointing out that the total planted oilseed area is almost 1.2% lower than last year, with smaller soybean and sunflower acreages driving the decline,” Holland adds.

All-wheat acres were very close to the average analyst estimate of 49.656 million acres, with USDA offering a slightly lower total of 49.628 million acres. That’s also a year-over-year increase of 9%. The total is comprised of 25.7 million acres of hard red winter, 7.66 million acres of soft red winter, 3.68 million acres of white winter, 11.1 million acres of spring wheat and 1.48 million acres of durum wheat.

“The increase in hay acres is also notable – hay stocks were at their lowest level since 1954 earlier this year, so the shift to more hay acres from the March 31 report also explains the smaller soybean acreage,” Holland says. “Hay acres are notoriously a wild card in these acreage reports, as those acres tend to flex in and out of other crop rotations as market conditions require.”

Stocks tighten

Quarterly corn stocks moved from 7.401 billion bushels at the beginning of March down to 4.106 billion bushels through June 1. It’s also below year-ago results of 4.349 billion bushels. Analysts were generally expecting a larger total, with an average trade guess of 4.255 billion bushels, although individual estimates ranged between 4.086 billion and 4.410 billion bushels.

Quarterly soybean stocks also shifted lower, moving from 1.685 billion bushels in March down to 796 million bushels through June 1. That was lower than both year-ago totals of 968 million bushels and the average trade guess of 812 million bushels. Individual analyst estimates ranged between 750 million and 920 million bushels.

Quarterly wheat stocks eroded from 946 million bushels in March down to 580 million bushels through June 1. That was modestly lower than year-ago-totals of 698 million bushels and was also below the entire range of trade guesses, which came in between 588 million and 690 million bushels.

EDITOR’S TAKE:

As market experts often state – “markets don’t like surprises”. This was a huge surprise! So, the markets reacted in what turned out to be a wild trading week. Add in weather with lower stockpiles on hand and this is very likely going to keep prices elevated through harvest. While no one can predict the weather, the USDA miss on acreage planted should have been less dramatic. Yet it demonstrates just how sensitive commodity markets can be. This helps us explain to you what kind of risk and uncertainty farmers/ranchers deal with day-in and day-out. Trying to manage that kind of risk takes a very special person with a mind for business. You can help make their lives a little less uncertain and uncomplicated by offering them the parts and service they need to keep their vehicles operating at tip-top condition. Also, help reduce their stress by promoting AgPack®, a package that can lower their operating costs by thousands of dollars through exclusive rebates and discounts. Don’t be afraid to let them know you care about their well-being and on-going success!