The USDA’s Little Surprise Party…
The USDA pulled out the hats and noisemakers on Wednesday and threw a big surprise party with the release of the annual acreage report.
Pre-party suspense: Leading up to the big reveal, market analysts suspected the USDA would report an uptick in planted acreage compared to farmers’ intentions announced in the March report.
But as is typical in the annual June release, the USDA wanted to send partygoers home with a little taste of the unexpected.
By the numbers:
- 92.7 million: estimated 2021 corn acres
- 87.6 million: estimated 2021 soybean acres
- 46.7 million: estimated 2021 wheat acres
All three crops were up by millions of acres compared to 2020. But corn and soybeans, typically the life of the party, shocked attendees as both were reported as being a million+ planted acres under market watchers’ predictions for this year.
The shockwave: When the lights came on, analysts sat wide-eyed and waited for the markets to respond.
And respond they did… like a bull in a china shop.
Lower acreage and grain stock estimates shot corn and soybean prices sky-high and left sellers reveling and celebrating Christmas in June. Corn futures closed 40 cents higher, its daily limit up, and soybean futures finished more than 90 cents higher. Whoa.
Where this goes: The status of grain stockpiles and the anticipated results of harvest season will likely cause more market volatility. However, long-term prices will likely be contingent upon one major factor: the weather.
Time will tell whether Mother Nature will be a gracious host or a disgruntled party crasher.