Prospective Plantings report delivered a 'market shocker' for soybeans and corn markets
On this week's Agweek Market Wrap, AgweekTV's Michelle Rook and Randy Martinson of Martinson Ag Risk Management discuss the record soybean numbers and a hit to corn acres in the Prospective Plantings Report.
The Thursday, March 31, Prospective Plantings report was a "market shocker," said AgweekTV's Michelle Rook, with expectations of record soybean acres and lowered corn acres.
The report said U.S. farmers plan to plant about 91 million acres of soybeans.
"If we follow through with that, it has the soybean numbers looking a little daunting for the year," he said.
Those numbers would result in big ending stocks of soybeans, and Martinson said the market likely will need to pull at least a couple dollars out. Soybeans, soybean meal and soybean oil all were down this week, Rook said.
However, exports likely will increase, which will help somewhat, Martinson said.
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The report lowered corn acreage by about 3.9 million acres, Rook said, and in response the December corn contract hit new contract highs Thursday and Friday.
"It's trying to buy acres, and it's going to have an uphill battle to do it," Martinson said.
He and Rook explained that many of the acres not going into corn in the Corn Belt would have been fields that would have been corn on corn. That would require more fertilizer and would have reduced yield, neither of which are advantageous given the current fertilizer prices.
In areas more "fringe" to the Corn Belt, including North Dakota, more acres switched to specialty crops that are contracted. That means it's "going to be hard to pull those acres away," Martinson said.
South Dakota growers intend to plant record amounts of soybeans and corn, while North Dakota farmers expect to plant less spring wheat, corn and soybeans and more "minor" crops, like barley, sunflowers, peas and lentils.
"A lot of other crops grabbed a lot of attention in North Dakota," Martinson said.
Any switch to corn would likely come out of soybean or durum acres, he said.
If realized, those numbers of corn acres could mean tight corn supplies.
Meanwhile, wheat's quarterly stocks were the lowest since 2008, but exports also are the second lowest on record, Martinson said. Weekly crop reports will start Monday, which will give some direction to the markets regarding winter wheat conditions.
Cattle and hogs both were down this week. Cattle struggled this week though exports were good. Martinson said he still expects better days ahead for cattle. A bullish Hogs and Pigs report faded quickly, but Martinson said supplies still are going to be extremely tight.
Livestock markets will improve if the economy stabilizes and gas prices decrease, he predicted.