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No room for complacency in U.S. soybean market after acreage shocker

The U.S. government delivered one of the most bullish numbers possible to the soybean market on Thursday, but traders were uninspired, rejecting the initial spike in Chicago futures caused by the data.

U.S. soybean and corn plantings kept alive their streak of being unpredictable as soy acres fell below the analyst range of guesses, wiping out the record prediction made back in March.

CBOT November futures SX2 shed more than 1% and settled at $14.58 per bushel on Thursday, more than 50 cents off the session’s high. Continued economic stress and pressure in oil markets on the back of last week’s sizable CBOT selloff may have been too distracting to generate soybean supply worries.

But since projected U.S. soybean stocks were already teetering between concerning and comfortable, the huge loss in acres, if realized, offers little space for contentment.

In its annual June acreage survey, the U.S. Department of Agriculture’s statistics service (NASS) pegged soybean plantings at 88.33 million acres, down from 91 million in March, well below the average trade guess of 90.4 million and below the lowest guess of 88.7 million.

That marks the third time in four years that USDA’s June soy area fell outside the range of predictions, and it is the third- largest acreage decline from the March to June surveys since 2007, the largest being 2019, when wet weather severely delayed planting.

Assuming USDA’s trend yield of 51.5 bushels per acre, the lower soybean plantings cut 133 million bushels off the agency’s previous harvest projection, a sizable portion of the predicted ending stocks of 280 million bushels.

That would tighten the supply situation into 2023 instead of loosening it as was previously expected, even with a significant reduction in demand targets.

U.S. soybean planting got off to a slower start this year, but things got on track relatively early. The only areas where efforts stayed notably delayed were North Dakota, northwest Minnesota and parts of South Dakota, combining for at least 10% of U.S. soy plantings.

More acres than usual were unplanted in these states by the time NASS was conducting its survey in the first half of June, prompting the agency to call for a resurvey next month with any necessary revisions appearing in the Aug. 12 report.

But it is not obvious that the surprisingly low national acreage was driven by losses in the northwestern growing areas since soy plantings shrank from March in most other top states, where sowing pace exceeded normal in the second half of the spring.

Some market participants may think national soybean area could be higher once NASS resurveys, but there is not much recent precedent for a resurvey to yield more acres.

The spring of 2020 was terribly wet for North Dakota and planting was very slow. June corn and soybean acres in the state were both lower than in March that year, and finals were even lower.

NASS resurveyed most major states in July 2019, and that turned up lower national soy and corn acres than in June, and again, the finals were a bit lower still.

North Dakota planted soybeans and corn this year more slowly than in 2020, but nationally the pace was comparable with 2019 only in early May. As of June 1, U.S. soy and corn were 71% and 89% planted, well above the 38% and 66% observed the same date in 2019.

Analysts basically nailed U.S. corn plantings on Thursday, which came in at 89.9 million acres, up from 89.5 million in March. That is not a super roomy number either, down from 93.4 million last year and well below the trade’s original 2022 hope back in March for 92 million.

The smaller bump in corn acres from March suggests corn did not largely take away from soybean acres, rather the entire universe came down. Corn plus soybeans, pegged in March at 180.45 million acres, came in on Thursday at 178.25 million, down 1.3% on the year.

It should also be noted that despite corn and soy declines in North Dakota, farmers in the top spring wheat producer increased those plantings from March even with the near-record sowing delays.

The trade predictions for both corn acres and stocks were nearly perfect, but the corn market reacted similarly to soybeans with December corn CZ2 plunging 5.2%, reaching the lowest levels since March 4.
Source: Reuters (Editing by Matthew Lewis, Karen Braun is a market analyst for Reuters. Views expressed above are her own)

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