On June 30 USDA released its annual acreage report, which is the result of field surveys of planted acres in the U.S. in 2010. The surveys were taken during the first two weeks of June and this USDA acreage report updates the USDA's March estimates from its Prospective Plantings report.
While the new acreage numbers and grain stock numbers USDA are a "game changer" and resulted in increased corn and soybean prices last week, more uncertainty lies ahead. There is concern that the excessive rain the Corn Belt has had in recent weeks is making yields even more uncertain for this year's crops. A lot will depend on weather during pollination for corn during July, and pod set for beans in August.
Corn acreage is up 2% in the U.S. this year compared to last year, and soybean acreage is also up 2% over a year ago. Corn growers planted 87.9 million acres this spring across the nation. Nationally, planted soybean acres in 2010 are estimated at a record 78.9 million acres, up from 77.5 million acres in 2009.
Estimated Corn Acres 2010 (millions of acres planted)
March 31 June 30
Iowa 13.5 13.0
Illinois 12.6 12.4
Nebraska 9.2 8.5
Minnesota 7.6 7.0
Indiana 5.7 5.9
South Dakota 5.0 4.4
Wisconsin 3.9 3.9
Missouri 3.3 3.7
For corn, the largest increases compared to last year are reported in Illinois and Kansas, each up 600,000 acres from 2009. The largest decrease is in Iowa, down 400,000 acres. Nebraska and South Dakota are each down 350,000 acres from 2009. For soybeans, the 2010 planted acreage at 78.9 million could result in a record large harvested area. Planted soybean acreage in 2010 is up by 300,000 acres in Iowa, Kansas, Minnesota and Nebraska, while the largest declines are in Arkansas and North Carolina.
The report, which cut the acreage for corn planting in the U.S. for 2010 by 1 million from the 88 million acre projected by USDA on March 31, left grain market analysts using such terms as "game changer" and "shocking." Don Roose, president of U.S. Commodities in West Des Moines, says, "If USDA is right, and it turns out we don't have the big corn surpluses after all, then this leaves the market more vulnerable to weather for the rest of this growing season."
Widespread predictions of a La Nina weather pattern could bring hotter and drier weather in July and August than the Corn Belt has experienced in recent years, says Elwynn Taylor, ISU Extension climatologist. That may provide farmers with a long-awaited opportunity to sell their corn near the $4 per bushel point, which is breakeven for many farmers.
Analyst Bryce Knorr of Farm Futures magazine called the USDA report "shocking" and says the news basically suggests that new crop corn supplies could be up to a billion bushels smaller than previous estimates based on the larger estimates of planted acreage released in the USDA's Planting Intentions report at the end of March."
Market analysts note that corn demand for livestock feed could rise by as much as 40% this year, as livestock prices and profitability have improved. Corn supplies have been fairly tight by historical standards, and the smaller than expected 2010 crop is likely to squeeze them even further.
"The demand side of the equation has been strong for the past several years," says USDA chief economist Joe Glauber. "We've seen big increases in supply, record crops, yet we're still seeing very, very strong demand for corn and soybeans. Another factor is that the federal government's biofuels mandate will require larger amounts of corn for ethanol production."
Meanwhile, the USDA shows U.S. soybean stocks of 571 million bushels, compared to an estimated average of 592 million, and corn stocks of 4,310 million bushels, compared to an estimate of 4,613 million bushels.