Initial Reaction : Planting Prospects and Quarterly Stocks
Teucrium | March 31, 2022
Top Take-Aways
1. Surprise – Fewer Corn Acres to be planted in 2022
2. More Acres Dedicated to Soybean vs. Corn – Only the 2nd Time in History
3. Estimates for the 5th Lowest All Wheat Planted Acres in US Recorded History (last year ranked as 4th lowest).
Corn
Quarterly Stocks Report
Corn stocks reported as of March 1st totaled 7.850 billion bushels, in-line with the average analyst estimate of 7.88. The quarterly disappearance is 3.79 billion bushels, ahead of last year's drawdown of 3.6 billion bushels.
Prospective Plantings
Corn planted area for 2022 is estimated at 89.5 million acres, 2.5 million less than the average analyst surveyed by Bloomberg. Assuming trendline yields this means a decline in production expectations of approximately 452 million bushels. This suggests that the US corn balance sheet will likely remain tight, even with record yields.
Soybeans
Quarterly Stocks Report
Soybean stocks reported as of March 1st totaled 1.931 billion bushels, up 24% from one year ago. This figure is above the average analyst estimate of 1.908 billion bushels. The quarterly rate of disappearance declined 12% from last year.
Prospective Plantings
Soybean planted area for 2022 is estimated at 91 million acres, exceeding the average analyst estimate of 88.9. 2.1 million acres above expectations means that we can expect an additional 108 million bushels of soybeans assuming trendline yields. Recall that drought in South America has contributed to a loss of over 30 million metric tons of soybean production this year (equivalent to 1.1 billion bushels). An additional 100 million bushels from the US will be nice to have, but may not have a material impact on the global balance sheet.
Wheat
Quarterly Stocks Report
Wheat stocks reported as of March 1st totaled 1.02 billion bushels, below the analyst estimate of 1.039. According to the USDA, will total stocks are down 22 percent from last year; the indicated disappearance for the quarter is 10 percent lower versus the same period last year.
Prospective Plantings
Wheat planted area for 2022 is estimated at 47.4 million acres which is in-line with the average analyst estimate of 47.9. Total acres are up 1% from last year. The USDA notes that if these acreage estimates are realized the figures represents the 5th lowest all wheat planted since records began in 1919.
Market Reaction
Front month corn futures rallied on the news and are up over 2% as of this writing. Front month soybean futures headed the opposite direction and are down currently down more than 2%. Front month wheat futures immediately spiked but have since come back to trade near the same levels prior to the release, up slighting on the day.
Watch for the markets to focus on US weather, planting progress, and export pace in the coming weeks/months.