(The opinions expressed here are those of the author, a market analyst for Reuters.)
NAPERVILLE, Illinois – Unexpectedly light U.S. corn plantings on Thursday likely prevented what could have been ugly end-of-month trading in a corn market where speculators hold hefty short positions and prices are a third lower than a year ago on a build in global corn supplies.
New-crop Chicago corn futures on Thursday notched their biggest daily gains since July as the U.S. Department of Agriculture pegged 2024 U.S. corn plantings at 90.036 million acres, at the low end of analyst guesses, well below the average guess of 91.776 million and down 5% on the year.
Continued strength will depend on weather for both Brazil’s corn crop and the U.S. planting campaign over the next couple of months. However, the low corn acreage leaves room for upside in USDA’s June area survey, a likely outcome barring unusual circumstances, particularly weather disruptions.
This year marked the third of the last four where March corn intentions landed well below trade expectations. June corn acres have come in higher than in March in 15 of the last 20 years, but that was distinctly the case when March acres were sufficiently bullish.
The June trade bias following a bullish March is mixed, meaning Thursday’s outcome does not inform on the degree or direction of surprise in store for June.
March corn acres have been especially unpredictable in recent years as the trade has not come within 1% of the estimate since 2015. The average deviation since then is 2.1%, which is 1.9 million acres on a 90-million total.
March soybean acres have a habit of coming in lower than analysts anticipate, though they were dead-on the average guess this year at 86.5 million acres, the trade’s best performance since at least 2005.
However, that was probably accidental, as analysts would likely have picked a larger soybean area had they known corn would be 90 million acres. Thursday’s corn and soy area combines for 176.55 million acres, below the trade guess of 178.3 million and the final 2023 mix of 178.2 million.
The 2024 combo is lighter than other recent years not associated with major planting problems, suggesting the recent slide in crop prices has curbed acres. In the last five Marches, USDA’s combined corn and bean intentions averaged 179.3 million acres.
This is reflected in USDA’s 2024 principal crop planting projection of 313.3 million acres, down from 319.6 million in 2023. All wheat acres came in slightly higher than expected on Thursday, but other major crops such as cotton, sorghum and barley all came in below pre-report ideas.
Traders will need to consider the universe of crops, especially the corn-plus-beans mix, heading into June. Soybean acres tend to rise between the March and June surveys, occurring in 10 of the last 15 years. Karen Braun is a market analyst for Reuters. Views expressed above are her own.
(Editing by Jamie Freed)
