Market Silliness Expected After USDA Report
Thursday’s USDA Planting Intensions and Quarterly Stocks reports will have a big impact on the market, but exactly what the impact will be is unclear. There is always a fair amount of uncertainty going into these spring reports, but Darin Newsom, analyst with DTN, says this year the uncertainty is tremendous, “There are so many unknowns this year that is why I think this spring could be one of the more important spring seasons we see.” He said the uncertainty over the demand side of the market, the weather, planted acres, and the world financial condition have all combined to produce a great deal of volatility in the market. Estimates for corn acreage range from 95 million acres up to 99 million acres with no clear consensus about what farmers said they were going to plant. He added the corn market is not being driven so much by how many acres will be planted but what the weather will be and what those planted acres might yield.
Another thing to consider will be new acres that will be available for planting in 2013. Darrel Good, Ag Economist at University of Illinois, says, “Some additional cropland acreage has become available in 2013 due to fewer acres being enrolled in the Conservation Reserve Program. That acreage is reported at 27.04 million acres, 2.62 million fewer than enrolled last year. How much of that reduction will be planted to crops in 2013 is not known.”
As for soybeans, Newsom said, “It is almost irrelevant the number of acres that will be planted to soybeans, because it will all come down to weather.” He added it will be very hard to see an increase in the carryover number for soybeans given the level of demand we have coming. Good believes that the corn and soybean ratios will be close that those of 2012.
Newsom says the numbers in Thursday’s reports will not set the long term tone for corn and soybean prices, “I expect to see a lot of silliness around the market and for about the next two weeks. After that we will get back to trading weather.” Hoosier Ag Today market analyst Gary Wilhelmi concurrers, “No matter what the acres, it is the weather, yet to be determined, that calls the tune.” Wilhelmi says the average market guesses are: planting 97 million acres of corn and 78 million beans with wheat at 56 million.
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Indiana Planted acres
Corn
2010: 5,900,000
2011: 5,900,000
2012: 6,100,000
Soybeans
2010: 5,350,000
2011: 5,300,000
2012: 5,100,000
All Wheat
2010: 250,000
2011: 430,000
2012: 390,000