USDA confirms strong cut in 2022 acreage of corn

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     Porto Alegre, July 4, 2022 – There is strong apprehension in the international market about the effective planted area data, which were released on the 30th. The disclosed number was 89.92 mln acres, very close to what was expected by the market and confirming the strong retraction of area planted with corn in 2022. The big surprise was soybeans, with only 88.3 mln acres, a record area, but much lower than expected. At this point, corrections may still arise in this area of soybeans upward, since the survey was not able to capture the entire area expected for planting. It would not be surprising if a larger soybean area comes out in the USDA statistics later on, also because this represents a general cut in the grain area compared to last year in times of record prices.

     The corn acreage in 2021 was 83.7 mln acres. The March planting intentions report projected 89.5 mln acres for 2022. The market consensus was 89.8 mln acres for this June 30 report. USDA brought 89.92 mln acres. Basically, as expected and with no surprises. The surprising fact was that the area planted with soybeans was estimated at only 88.3 mln acres against the planting intentions of 91 mln acres and a consensus of 90.6 mln. USDA reported that at the data collection 15.8 mln acres of soybeans had not yet been planted. So, it is likely that we will have upward revisions when the planting data are confirmed in part of the soybean area. The fact is that the area was quite distorted in relation to what was calculated by the market, satellite research companies, and the very planting intentions with soybeans at record prices.

     The fall in the corn area and the slight increase in the soybean area are surprising in the general context of the US crop. This may indicate that many areas were left without planting, which seems to clash with the exceptional moment of prices in both local and international markets. It still seems difficult to arrive at such a small soybean area, despite being a record, and assess that in times of record prices producers did not have motivation to plant. We believe in some upward adjustment in acreage in the next updates.

Another pessimistic point was the quarterly stocks. Quarterly corn stocks stood at 4.34 billion bushels, well above the 4.11 billion in the same period last year. That is, there are more stocks today than last year, and this may influence the ending stocks of this business year on September 30. Soybeans also had the same picture: 971 mln against 769 mln bushels, respectively. This information ended up neutralizing the bullish moment of soybeans as it influenced the final stocks for 2022.

     In general, therefore, after the planted area data, even with some adjustments later on, the focus is solely on the weather in July, a crucial month for corn pollination in the United States. From the second week of July, corn crops begin the pollination and silking phase in the Midwest, and the high temperatures projected for the next two weeks have returned, but also with normal to above normal rainfall. Crop conditions dropped again last week, with 67% rating good to excellent. This situation is still not worrying because weather maps show rains ahead again and above 64% in the same period last year. Remembering that in 2021, with 64% of crops in good to excellent conditions, yields reached 177 bushels/acre, a new record.

     With this area picture partially defined, pollination weather is key for the corn market, which lost the support at USD 6.50/bushel last Friday. This was not due to the area picture released, but the stock position and the sharp lows in wheat. The arrival of the winter wheat crop in the Northern Hemisphere and Russia apparently opening an export channel from Ukraine are generating strong declines in wheat with impacts on corn. The US market is still under pressure from the entry of the Brazilian second corn crop, with strong initial shipments at Brazilian ports taking away export demand from the United States.

     The additional factor of the week was the acceleration of logistical complications in Argentina. Delays in shipments, difficulties in withdrawing grain from farms, lack of diesel oil in much of the country, and a probable shutdown of local agribusiness scheduled for July 13. This directly affects the export flow and can cause international volatilities for soybeans, corn and wheat.

     Agência SAFRAS Latam

Copyright 2022 – Grupo CMA

USDA confirms strong cut in 2022 acreage of corn

     Porto Alegre, July 4, 2022 – There is strong apprehension in the international market about the effective planted area data, which were released on the 30th. The disclosed number was 89.92 mln acres, very close to what was expected by the market and confirming the strong retraction of area planted with corn in 2022. The big surprise was soybeans, with only 88.3 mln acres, a record area, but much lower than expected. At this point, corrections may still arise in this area of soybeans upward, since the survey was not able to capture the entire area expected for planting. It would not be surprising if a larger soybean area comes out in the USDA statistics later on, also because this represents a general cut in the grain area compared to last year in times of record prices.

     The corn acreage in 2021 was 83.7 mln acres. The March planting intentions report projected 89.5 mln acres for 2022. The market consensus was 89.8 mln acres for this June 30 report. USDA brought 89.92 mln acres. Basically, as expected and with no surprises. The surprising fact was that the area planted with soybeans was estimated at only 88.3 mln acres against the planting intentions of 91 mln acres and a consensus of 90.6 mln. USDA reported that at the data collection 15.8 mln acres of soybeans had not yet been planted. So, it is likely that we will have upward revisions when the planting data are confirmed in part of the soybean area. The fact is that the area was quite distorted in relation to what was calculated by the market, satellite research companies, and the very planting intentions with soybeans at record prices.

     The fall in the corn area and the slight increase in the soybean area are surprising in the general context of the US crop. This may indicate that many areas were left without planting, which seems to clash with the exceptional moment of prices in both local and international markets. It still seems difficult to arrive at such a small soybean area, despite being a record, and assess that in times of record prices producers did not have motivation to plant. We believe in some upward adjustment in acreage in the next updates.

Another pessimistic point was the quarterly stocks. Quarterly corn stocks stood at 4.34 billion bushels, well above the 4.11 billion in the same period last year. That is, there are more stocks today than last year, and this may influence the ending stocks of this business year on September 30. Soybeans also had the same picture: 971 mln against 769 mln bushels, respectively. This information ended up neutralizing the bullish moment of soybeans as it influenced the final stocks for 2022.

     In general, therefore, after the planted area data, even with some adjustments later on, the focus is solely on the weather in July, a crucial month for corn pollination in the United States. From the second week of July, corn crops begin the pollination and silking phase in the Midwest, and the high temperatures projected for the next two weeks have returned, but also with normal to above normal rainfall. Crop conditions dropped again last week, with 67% rating good to excellent. This situation is still not worrying because weather maps show rains ahead again and above 64% in the same period last year. Remembering that in 2021, with 64% of crops in good to excellent conditions, yields reached 177 bushels/acre, a new record.

     With this area picture partially defined, pollination weather is key for the corn market, which lost the support at USD 6.50/bushel last Friday. This was not due to the area picture released, but the stock position and the sharp lows in wheat. The arrival of the winter wheat crop in the Northern Hemisphere and Russia apparently opening an export channel from Ukraine are generating strong declines in wheat with impacts on corn. The US market is still under pressure from the entry of the Brazilian second corn crop, with strong initial shipments at Brazilian ports taking away export demand from the United States.

     The additional factor of the week was the acceleration of logistical complications in Argentina. Delays in shipments, difficulties in withdrawing grain from farms, lack of diesel oil in much of the country, and a probable shutdown of local agribusiness scheduled for July 13. This directly affects the export flow and can cause international volatilities for soybeans, corn and wheat.

     Agência SAFRAS Latam

Copyright 2022 – Grupo CMA