The National Agricultural Statistics Service has said that because of the lateness of the harvest in several states, it will re-survey corn and soybean production for yield, acreage and stocks. The department said it "may release" the updated forecasts in the March report.
When producers last were surveyed in November and December, there were significant numbers of unharvested corn acres in Illinois, Michigan, Minnesota, North Dakota, South Dakota and Wisconsin and unharvested acres of soybeans in Georgia, North Carolina, South Carolina, Virginia and Ohio. The amount of unharvested corn represents close to 10 percent of USDA's latest forecast for harvested acres at 79.6 million acres or 796,000 acres unharvested. The amount of acres yet to be harvested on soybeans represents about 3 percent of the 76.4 million harvested acres or, 229,000. Note, USDA's estimate for a loss or reduction of 200,000 acres on soybeans came pretty close to the survey.
However, USDA's estimate Jan. 12 was higher than any private yield estimate and four bushels per acre higher than any producers indicated on conducted surveys. Furthermore, the Dec. 1 stocks estimate was calculated when much of the corn crop still was in the fields. More than 1.5 billion bushels of corn was classified as "field storage" when the department surveyed for Jan. 12's report.
The fact that USDA says it will re-survey should tell us something about the agency's confidence in its report. Still, the bigger shock was the loss of 6.2 million acres of winter wheat seedings. Traders in Chicago who already were penciling in a 3 million-acre gain for corn this coming growing season immediately jumped their expectations by another 3 million acres, and this now leaves the attitude that corn is a bear market for the summer into fall.
The corn market was loaded up long, and the long-only funds certainly have been handed another golden chance to buy corn. If you add the 3 million acres of Conservation Reserve Program land on top of the 6.2 million abandoned wheat acres, you now have 9.2 million acres up for grabs. Might this soften the need of an acreage fight? I think it does.
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One unknown that could hand this market some optimism is if the EPA approves the 15 percent mandate. The agency has indicated that it will come out with a decision by June. However, we haven't been able to get it to decide on the biodiesel incentives either.
Basis levels have firmed in Brazil, and that, along with the sharp break in U.S. soybean prices, once again has made the U.S. the market of choice. Crushing margins in China for processing imported soybeans have been quite profitable -- in some cases, triple those of November. This would explain why China's appetite for U.S. soybeans has been so good. Basis the March soybeans, resistance should be 995, 1001 and 1010. I would be shocked if this market came back to more than 1020.
With huge South American crops able to compete March through the later part of August, soybeans have the potential to fall back to 878. November soybeans last year got to 784.5 March 2, and that was in an extremely negative time economically, though we did not have major competition out of Brazil and there was no acreage fight.
