USDA on Friday delivered a double-dose of bearish news for soybeans when it forecast that farmers will plant more soybeans this year at a time when there are 200 million more bushels of soybeans in storage than a year ago.
The grain trade expected more soybean acres, but USDA’s forecast of 89.5 million was even larger than trade estimates. That increase of 7%, or 6 million more than a year ago, will draw acres from corn and wheat, both of which will have smaller areas this year.
Also bearish for soybean prices was the quarterly stocks report, which showed 1.735 billion bushels of soybeans in storage, which topped the average forecast and was up from the 1.53 billion a year ago. Corn and wheat stocks of 8.62 billion and 1.66 billion, respectively, were above trade averages and greater than a year ago.
“USDA’s March 31 reports have a well-deserved reputation for surprises, and they proved why again today,” said Bryce Knorr, Farm Futures senior grain analyst. “Soybeans got a double dose of bearish news. Farmers as expected said they want to plant record acres, and their intentions were even more than we found in our survey."
Knorr said growers across the country are moving to soybeans and cutting back on other crops, including spring wheat, sorghum and corn. This was especially true in North Dakota, where soybean acreage is up 14% from 2016, while spring wheat seedings should be down 10%.
USDA said soybean acreage intentions are up or unchanged in 27 of the 31 states it surveys.
“CBOT May soybeans traded to six-month lows before the report. The market is oversold, but next downside support is $9.3725. A test of that level could trigger short covering, but growers shouldn’t expect any real rallies until we’re well into the growing season,” said Knorr.
Near midday on Friday and after the report, May soybeans were down 17 cents at $9.46 and new-crop November was down 8-1/2 at $9.54-3/4. May corn was up 6 at $3.63-1/2 and December up 6-1/4 at $3.87-1/4.
Total wheat acreage was expected to be down this year as a drop in winter wheat’s area had been known for months. Friday’s report was the season’s first for spring and durum wheat and it showed spring wheat down 3% at 11.31 million acres and durum down 17% at 2 million. North Dakota, the biggest durum and spring wheat producer, is expected to see a 10% drop in spring wheat acreage and a 21% drop in durum.
“The acreage numbers are slightly supportive for corn. Corn was trending higher just ahead of the report, so there may be fund money deciding to get long today for a weather rally on end-of-the-quarter positioning,” said Knorr. “The stocks number would appear to indicate lower feed usage due to the fairly mild winter and abundant supplies of competing rations.”
USDA’s estimate is “only 68 million bushels above our projection”, less than 1%, which is within the range of sampling error, said Knorr.
“May (corn) futures rallied up to the moving average resistance I suggested in this morning’s report on FarmFutures.com,” he said.