Even in mid-June, commodity market analysts and traders are already looking ahead to the USDA Acreage Report on June 30. Joe Vaclavik, founder and president of Standard Grain in Tennessee, says it’s one of the biggest reports of the year.
“It’s often associated with a lot of volatility. This year, in particular, I think it’s going to be messy, and, I think, there’s gonna be some surprises. We know that up north, in North Dakota, Minnesota, and maybe parts of South Dakota, they didn’t get all of their intended corn acres planted. I guess the question regarding those areas is what happened? Did it get switched to other crops? Was there some prevent plant? Did a lot of it go into soybeans? Did a lot of it go into spring wheat? So, I think that that area, in particular, is a big question mark.”
He says there are a lot of other question marks around the country when it comes to the corn versus soybeans acreage battle.
“Because of what happened in the new crop corn versus soybean spreads following that March survey period, the corn market outperformed soybeans by a really wide margin and did much, much better than beans, and incentivized farmers to perhaps switch some intended soybean acres back to corn. So, you may see additional corn acres versus intentions in other places, which could maybe more than make up for what we lose in North Dakota corn acres and Minnesota corn acres. There are a lot of irons in the fire here that, the March acreage report which we’ve been using to this point, is typically really unreliable. The survey responses are very low. It’s a bad report. This June one should provide a little bit more clarity.”
Vaclavik isn’t surprised that the corn market has recently been outperforming soybeans despite higher input costs.
“No, because it all comes down to just mathematics, and when the last-minute decisions were being made, corn pencils better. I mean, this fertilizer situation is why we lost corn acres because the inputs were so high, but even when you account for the higher input costs in corn, it’s still penciled better, really, especially in the weeks immediately following that survey period. That corn-soybean ratio favored corn, and all the farm budgets favor corn, if the fertilizer was purchased or available. So, I wouldn’t be surprised if we bought back some corn acres in other places and maybe lost some up north. That’s going to be a surprising report. There’s going to be something that comes out of nowhere on that deal. I don’t know what it’s going to be, but there’s going to be something there.”
He doesn’t have any specific predictions for this year’s Acreage Report, but he does encourage people to be ready for anything.
“Just be prepared for some volatility. We’ve seen big rallies on report day, and we’ve seen a big sell-off on report day. The period from the June report we had last week through that June 30 report is typically kind of an ugly timeframe for the corn market in particular, and it doesn’t have to be this year. I don’t have any big predictions about the report or anything like that. I know there’s going to be volatility associated with it because there’s going to be some new piece of information that we were not privy to before it.”