KANSAS CITY — Seldom in recent memory has a U.S. Department of Agriculture report delivered a shock to the markets as great as the June 28 annual Acreage report, which contained a higher-than-anticipated 2019 corn planted area estimate and a surprisingly low 2019 soybean planted area estimate. Corn futures reacted by turning sharply lower for the day, while soybeans were higher.
“The acreage number injected a substantial amount of uncertainty into both markets that appears set to stay in place throughout the summer,” University of Illinois agricultural economist Todd Hubbs said in farmdocdaily.
The U.S.D.A. estimated 2019 corn planted area at 91.7 million acres, up 2.9% from 2018, but down 1.2% from the March Prospective Plantings forecast, well above trade expectations that averaged about 87 million acres and even above the full range of trade forecasts. Traders had expected a much lower planted area estimate due to planting delays and prevented planted acres because of excessive spring moisture.
Soybean planted area was estimated at 80.04 million acres, down 10% from 2018, down 5% from March intentions and the lowest since 2013 if realized. The U.S.D.A. estimate was well below the trade average of about 84.5 million acres and even below the full range of trade forecasts.
Record low plantings of all wheat, estimated at 45.61 million acres, seemingly were overshadowed by the corn acreage number, and wheat futures largely were followers of corn.
The corn planting number was especially surprising because it reversed the downward trend projected in the World Agricultural Supply and Demand Estimates report on June 11. The non-survey-based WASDE projected corn planted area was 89.8 million acres, down 3 million acres from the March intention of 92.8 million acres. The Acreage report’s survey-based estimate of 91.7 million acres was up 1.9 million acres from the WASDE report, while the trade had expected the number to be cut by another 2.8 million acres from the WASDE projection. Based on the Acreage report estimates of 91.7 million planted acres and 83.6 million harvested acres, 2019 corn production would stand at 13,877 million bus, down 3.8% from 14,420 million bus in 2018.
Nearby corn futures soared 39c a bu, or 9%, from recent lows to a five-year high on June 17, fueled by the June WASDE data. Futures subsequently (as of July 1) retreated about 43c, or 9%, since June 17, with 28c, or 65%, of the decline coming since the Acreage report. Corn futures at one point on June 28 were down the 25c-bu daily limit and posted the widest daily losses in about three years.
The trade’s expectation of sharply lower corn planted area stemmed from widespread indications of acres going unplanted because of historic delays from excessive rainfall and flooding across much of the key growing region, especially in the eastern Corn Belt. Those ideas had been supported by the U.S.D.A.’s comments in the June 11 WASDE.
“Surprisingly, the major producing states in the eastern Corn Belt saw slight to no changes from the March intentions,” Mr. Hubbs said. “The prospect of considerable prevented planting acreage in the eastern Corn Belt places the 91.7 million acres in the June report in question. A lack of clarity about prevented planting acreage reported in the June survey window remains a concern and points toward further downward revisions in the August crop report.”
Soybean acreage, meanwhile, was moving in the opposite direction of corn, with soybean acreage lower in every state included in the June Acreage report. The U.S.D.A. had left its projected soybean planted area unchanged in the June WASDE but dropped the estimate by 4.6 million acres from the March intentions and by 9.2 million acres from 2018 in the Acreage report. After rising sharply immediately after the report, nearby soybean futures mostly settled back to pre-report levels early last week.
“The substantial drop in soybean acreage may indicate issues with planting, but the large totals left to plant place the soybean acreage estimate in question as well,” Mr. Hubbs said.
The U.S.D.A. indicated it will resurvey farmers in 14 states in July with any acreage revisions made in the Aug. 12 Crop Production report, which will include the first survey-based production estimates for the 2019 corn and soybeans.
The market, especially soybeans, already has had unprecedented uncertainty over trade issues in the past year. U.S.D.A. forecasts of planted area wildly divergent from expectations further add to that uncertainty. Summer weather now will be key for its impact on yields, whether the U.S.D.A. revises acreage numbers or not.