There are fewer corn acres in the United States than expected.
There is also less corn in storage than thought.
Chicago corn futures soared eight percent Tuesday morning after the U.S. Department of Agriculture reported that 87.872 million acres were seeded, more than a million acres less than the March estimate. The average of analysts’ pre-report guesses was 89.229 million.
Riding on corn’s coattails, oats jumped the 20 cent US per bushel limit.
The report reversed a downward price trend of the past two weeks that had been fueled by generally excellent growing weather in the U.S. Midwest. Corn had hit a nine-month low Tuesday, the day before the report was released.
Old crop soybeans were up slightly after the USDA reported tight stocks but more seeded acres than expected.
Soybean area was pegged at 78.868 million acres, up from the March estimate of 78.14 million and the analysts’ average of 78.183 million.
As for stocks, USDA put corn at 4.31 billion bu., six percent less than expected because of record ethanol production and strong export demand. Also, feed use was up because of quality problems. More bushels of corn are required get the same feed value.
Soybean stocks came in at 571 million bu., less than expectations of 594 million.
The news on wheat was bearish.
The USDA said U.S. farmers planted 54.3 million acres of wheat, one percent more than the trade expected. Wheat stocks were 973 million bu., four percent more than the trade guess.
However, wheat futures were rising Wednesday morning, lifted by the rising tide of corn.
Despite the area reduction, the U.S. could still produce a record corn crop of 13.24 billion bu. and a near record soybean crop of 3.345 billion bu. However, with strong corn demand expected in the coming year, year-end stocks for 2010-11 could fall.
In mid-morning trade, Winnipeg July canola was up $3.60 Cdn per tonne and November was up $3.20. Barley was unchanged.
For more coverage of the USDA report, see Ed White’s blog at Producer.com.
