Producers on the final day of the Farm Management Tour heard a preview of some of the expectations of Friday’s June grain stocks and acreage reports from USDA by Dr. Chris Hurt, Purdue extension agricultural economist. During his lunchtime outlook address he got right to the point. Stocks of corn and soybeans are tight and if USDA pegs them even tighter adjust your seatbelts.
“We’re in that situation where if USDA says there’s some more corn or soybeans than we thought or there’s some less, we could have a lot of reaction pricewise in the old crop, especially I think if they say we have a shorter situation where we have less inventory. The reason for that is to get people to cut back on usage we have a very short period to do that and that means you have to have substantially higher prices.”
But Hurt also sees a market that is vulnerable to a USDA report of higher than thought stocks.
“Because we see old crop beans, maybe a $3 premium to new crop. We see old crop corn something in the range of $2 premium to the new crop. If there is more inventory then that wide gap of higher prices for the old crop really could collapse very quickly. So I think there are a lot of dynamics potential, but that’s heavily on the old crop. The direction on the new crop will be much muted. If you get a big move on the old crop up or down, there will be some on the new crop but it will be much less.”
The acreage report will reflect data collected early in the month and the attitude is the report will be seen as inconclusive because of the number of acres still not planted today.
“I think we’re always interested to see what USDA has to say on the acreage numbers, so I think we examine it for 10 or 15 minutes and the kind of dismiss it and say we’re just going to have to get more information including the possibility that USDA will announce a follow up survey in some of these states that have very delayed planting to try to get a more accurate number going into August.”
Report release time is noon eastern Friday.