Corn acres up nationally; soybean acres decline

The U.S. Department of Agriculture’s Acreage Report sent corn and soybean prices in opposite directions, economists said. At 94 million acres, this year’s corn crop is the third largest since 1944.

Corn acreage in the U.S. rose 3.4% from February estimates, while soybean acres fell 4.6%. Soybeans were down to 83.5 million acres. Rice and cotton acres were up, the report stated, with rice up 7.5% from February’s estimates and cotton up 1.7% to 11.1 million acres in June.  After the report, prices rose for soybeans and sank for corn.

“There were some unexpected changes in harvest-month futures prices Friday after that report came out,” said Hunter Biram, extension economist for the University of Arkansas System Division of Agriculture. Looking at the Chicago Mercantile Exchange price history, “you’ll just see a straight line – down in the case of corn because of higher production expectations or shooting straight up” for soybeans because of the fewer acres.

“December corn futures decreased by 31 cents to $5.06, while November soybean futures increased nearly 60 cents to $13.51 per bushel immediately after the release of the June acreage report,” Biram said. “Currently, December corn is sitting at sub-$5 and soybeans remaining constant around $13.50 per bushel. All that’s to say soybean prices are looking relatively better than they were prior to the report. Corn prices not looking as good.”

“Recent upticks in the prices of both commodities leading up to the June report have been driven by drought throughout major crop-producing states, causing a ‘crop scare event’,” Biram said. “During this crop scare, the drought impacted supply expectations which caused market and futures prices to increase.”

“The big scare had us asking if we will have the rain to meet those yield expectations,” Biram said. “And for a couple of weeks, there was a big concern that we weren’t going to be there.”

Biram said prices peaked on June 21. A week later, a massive storm system raked the upper Midwest, bringing rain, but also a destructive derecho that knocked out power to about a half-million people. Additional rain – flooding rain – hit parts of the Midwest over the weekend.

“A lot of those fears that the yield wasn’t going to meet expectation have been washed away to some degree,” he said. “That’s good news in terms of production and bad news in terms of prices.”

“The large increase in corn acreage in the June acreage report will make the corn market price less susceptible to future supply shocks, causing a lower but more stable price environment,” Biram said. “However, the opposite may hold true for soybeans which have dropped 4 million acres. As there are fewer soybean acres than previously projected, soybean prices could be more susceptible to further detrimental weather, which causes deterioration in crop conditions and expected yield.”