As expected, the USDA's June 30 Acreage report was a market mover, and Michelle Rook and Randy Martinson broke it down in this week's Agweek Market Wrap.
"It was an up week in grains and everything," said Rook.
Rook said that "funds were selling off" going into the June 30 report, and following its release, prices for corn, soybeans and wheat all shot up.
Rook said the movement came from acreage numbers for corn and soybeans coming in below expectations.
"That really was the main driver this week," Martinson said of the acreage numbers.
The June 30 acreage report included corn up only 2% from 2020 and soybeans up around 5%.
"Big surprise to the trade, and that really sent the grains sharply higher while pushing corn limit up," Martinson said. "Soybeans tried to get to the limit, but finishing over 90 cents higher."
Martinson and Rook said that over 50% of the increased acreage for corn and soybeans came in North Dakota, South Dakota, Minnesota and Iowa -- all areas facing drought conditions.
"Where the increase in acres came is right where we didn't need it," Martinson said.
The commitment of traders will really start to be tested after this week, Martinson said, with the focus of the markets now on weather.
"The fact that we need to get every bushel we can right now because of the concerns about lower than expected acreage," Martinson said. "Weather still isn't very cooperative."
Rook said that even before the release of the June 30 report, crops had no room for error
"We have even less room for error now," she said.
Rook and Martinson speculated if things continue down this path what corn and soybean ending stocks would look like.
"Are we going to be, at some point, under a billion bushels ending stocks on corn," said Rook. "And maybe even below what we saw for our lowest ending stocks on beans for this coming year."
Martinson said he thinks we will.
"I think we will see numbers or some reports will show ending stocks for corn below a billion bushels, and I think we'll be at or below 100 million for soybeans at some point during this next three to four months," he said.
He said don't expect much in the July report, but by the time August rolls around -- especially if it stays hot and dry, the USDA will lower yield enough to hit those numbers.