Grain Stocks and Prospective Plantings reports show surprises

The USDA has a habit of surprises and Friday's Grain Stocks and Prospective Plantings reports were no different. The overall bearish stocks and seeding reports on corn were both much larger than the pre-report estimates. While both wheat and soybean stocks were also above expectations, those were not on as large of scale and acreage intentions on both fell more than estimated ahead of the report. Corn led the bearish reaction, but wheat and soybeans fell as well. At Friday's close, corn futures were down 17 cents, with wheat off 6 to 10 cents and soybeans were down 5 cents. PROSPECTIVE PLANTINGS Corn Corn seeding intentions came out at 92.8 ma -- not only 1.7 ma above the average trade estimate, but 600,000 acres above the highest pre-report estimate. The total increase in acres is projected to be 3.7 ma above last year. The trade will likely take this as a starting point, with changes as massive flooding issues throughout the Midwest could lead to lower acres. Soybeans Perhaps Friday's low acreage intentions is the first step in curing what is now a U.S. and world record large soybean supply. That's likely due to falling Chinese demand due to trade disagreements with the U.S. and the demand-dampening African swine fever, which has decimated the Chinese hog herd, reducing demand for soybean meal. USDA pegged U.S. soybean seeding at a sharply lower 84.6 ma -- 1.6 ma below the pre-report estimate and a huge 4.6 ma below last year's 89.2 ma. As in corn, the soybean acres are a moving target with even more flooding problems anticipated and the tendency for USDA's March-to-June acreage to increase. Typically, a late spring often leads to more soybeans at the expense of either corn or spring wheat. Wheat Prospective all-wheat plantings at 45.8 million acres (ma) compares to the pre-report average estimate of 46.9 ma, down 2 ma from last year. Spring wheat acres were at 12.8 ma, 600,000 acres below the average estimate and 400,000 acres below last year's final planting number. The drop in spring wheat intentions is likely attributed to the anticipation of potential flooding and excess water from the huge snowpack in the Northern Plains, along with the large spring wheat carryout expected. Conclusion The net effect of the planting intentions released on March 29 is clearly bearish for corn, but slightly bullish for wheat and soybeans. Price movement between now and when planting commences in the Midwest will send a signal to farmers and falling corn prices on Friday clearly signaled this many acres aren't needed.