Corn and soybeans garnered most of the attention following the USDA’s June 30 Acreage and Grain Stocks reports, with little change forecast in hay acreage. Implications for feed prices are highly dependent on weather and crop yields.
Acreage report
The USDA Acreage report provided the market with fireworks, with surprises in both corn and soybean acreage, according to a summary from John Newton, director of Market Intelligence with the American Farm Bureau Federation (AFBF).
Corn: Growers reported they planted or intended to plant 90.9 million acres of corn this year, 3.1 million acres (3 percent) less than last year. Corn planted acres came in 983,000 acres larger than the average trade guess, but 890,000 acres more than the USDA’s March planting intentions report. Corn acreage intended for harvest is projected at 83.5 million acres, 3.7 million less than harvested in 2016.
With a difficult start to the growing season, yield is challenging to predict, according to Todd Hubbs, ag economist with the University of Illinois. He projected potential yield at or below the USDA's June assessment of 170.7 bushels per acre.
The size of the crop could ultimately be reduced, according to AFBF’s Newton. Many portions of the Corn Belt (Illinois and Indiana) and the High Plains currently have a large portion of the corn crop well below last year’s good-to-excellent ratings. Lower crop yields in the face of higher-than-anticipated corn acreage could work to push corn prices above the forecasted range of $3 to $3.80 per bushel.
Soybeans: Growers planted or intended to plant 89.513 million acres of soybeans, up about 7 percent from last year, but below market expectations. At the time of the survey, producers indicated 10.9 percent of the intended soybean acreage was yet to be planted.
Soybean harvested acreage is projected at 88.7 million acres, 7.2 million more than harvested in 2016. Yield potential is highly uncertain. The U.S. average yield is projected near 48.2 bushels per acre, but soybean traders are skeptical, Hubbs said.
The lower-than-anticipated soybean acreage means the crop size is likely to be smaller than projected if yields hold at or below current forecasts, Newton said.
The slow start to the planting season and weather complications led many to believe soybean acreage could top corn acreage for the first time since 1983. The market surprise in soybean acreage led to a sharp increase in new-crop soybean prices during the hours following the report release.
With the growing season only partially complete, changes in crop yield projections and future revisions to acreage will change the supply-side fundamentals. Then, the pace of consumption relative to supply will drive price expectations throughout the new-crop marketing year, Newton said.
Stocks report
June 1 corn stocks were estimated at 5.225 billion bushels, nearly 500 million bushels larger than last year and about 100 million bushels larger than the average trade guess. The June 1 soybean stocks estimate indicated 963 million bushels.
The USDA reports were not supportive for corn prices, Hubbs said. Year-ending stocks for corn will likely be 75 million bushels higher than the USDA's projections on June 9. In addition, the increase in corn acreage points to adequate supply during the 2017-18 marketing year, despite the potential issues with corn yield.
While soybean prices rallied on the less-than-expected planted acreage, the 2017 soybean acreage is still a record, and follows large crops in both the U.S. and South America. Significant soybean consumption growth or poor yields this crop year would be necessary to prevent growth in soybeans stocks over the next marketing year and, with that growth, price weakness, Hubbs said.
Other feedstuffs
Hay: U.S. hay producers intend to harvest 53.5 million acres of all hay in 2017, up less than 1 percent from 2016, according to the USDA’s Acreage report.
The expected harvested area of alfalfa and alfalfa mixtures, at 17.1 million acres, is up 1 percent (226,000 acres) from 2016. All other types of hay harvested are expected to total 36.4 million acres, down less than 1 percent (169,000 acres) from 2016.
Iowa (+200,000 acres of all hay, including +190,000 acres of alfalfa hay), South Dakota (+150,000 acres all hay) and Missouri (+100,000 acres all hay) were expected to post the biggest hay acreage increases in 2017.
However, the estimates of planted and harvested acreages were based primarily on surveys conducted during the first two weeks of June. Since then, conditions have deteriorated in major hay-producing areas of North and South Dakota and eastern Montana.
Based on the June surveys, biggest declines in acreage of all hay were expected in Minnesota, where alfalfa winterkill was heavy, along with Kansas and Oklahoma.
Cottonseed: Producers feeding cottonseed should see a larger supply. All cotton planted area for 2017 is estimated at 12.1 million acres, 20 percent more than last year.
Wheat: The jump in corn and soybean acreage likely comes at the expense of winter and spring wheat, Newton said. Total wheat acreage is estimated at 45.7 million acres, down 4.5 million acres from 2016, and the lowest level on record since 1919. 
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Dave Natzke
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