The May supply and demand report was issued by USDA Thursday and after the numbers showed corn ending stocks for both this year and next increased and a drop in soybean ending stocks and planted acres analysts questioned and the market reacted.
Corn dropped about 20 cents and soybeans went up 25 cents. Mike Silver with Kokomo Grain said it may just take a weather event to pull the corn market back up.
“You know some people would say it’s probably straight down in price for corn from here, and with a benign weather forecast there is no premium in the corn market right now from a weather standpoint. So one would have to wonder if we won’t get, and I suspect that we will, there hasn’t been a year that we haven’t gotten some kind of weather concern, that could give us some upside momentum in the corn prices. But clearly this new crop corn balance sheet has some negative implications to it.”
The report says only 73.9 million acres of soybeans will be planted this year, less than last year. The current year carryout was pegged at 210 million bushels and for next year it drops to 145 million bushels. There is where Silver started scratching his head.
“Clearly some great demand for soybeans and based on these numbers, one has to wonder if the price relationship between soybeans and corn did indeed attract more acreage. We’ll find out in the June 30th planted acreage report. But one has to scratch his head about this bean acreage number which is a little bit concerning. It implies higher prices as evidenced by the bean market being up 20-22 cents right now.”
USDA’s corn carryout was 851 million bushels for the current year, more than 100 million more than the average trade guess, and carryout for next year was projected at more than double this year, 1.881 million bushels. With all that corn on hand the corn market suffered Thursday.
The USDA has 2012 corn crop projections at 14.790 billion bushels and soybeans at 3.205 billion bushels.
The complete USDA crop production and World Outlook reports are available online.[audio:https://www.hoosieragtoday.com//wp-content/uploads//2012/05/Mike-Silver-on-USDA-crop-production.mp3|titles=Mike Silver on USDA crop production]