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USDA forecast corn acreage up 6% in 2016
Apr. 1, 2016
The USDA's Prospective Plantings Report released yesterday suggests low prices for corn and rice will continue, extending the current, two-year farm downturn through the end of 2016, if not beyond.
"The report really highlights how challenging the market is right now for major crops," said John Anderson, deputy chief economist of the American Farm Bureau Federation. "We currently have adequate supplies both in the U.S. and globally in these commodities. It doesn't look as though that will change. If we have normal yields, that supply side pressure will not ease up much."
Corn acreage was seen at a bigger-than-expected 93.601 million, which would be the third-highest level since 1944, in the government’s report. USDA also said corn stocks as of March 1 stood at 7.808 billion bushels, the second most on record and up from 7.750 billion bushels a year earlier.
The corn acreage outlook topped analysts’ expectations, which ranged from 89.000 million to 91.000 million, with an average of 89.972 million, according to a Reuters poll. In 2015, U.S. farmers seeded 87.999 million acres of corn.
The soybean prospective plantings figure came in at 82.236 million acres - on the low side of expectations, but still above some forecasts that had predicted just under 82 million acres.
Wheat acreage was also smaller than expectations. Winter and spring varieties combined were reported at 49.559 million acres. Pre-report estimates covered a wide range but averaged around 51.5 million acres. None of the publicly-released estimates were below 50 million acres. Wheat, like soy, however, will not likely increase greatly in price as long as corn surpluses remain.
Rice prospective plantings were well above market expectations at 3.064 million acres vs. USDA's projected rice plantings at 2.8 million acres. If this projection holds, it will be the first time since 2010 that rice acreage has topped 3 million acres. Recent tightening of world rice supplies may limit the damage from today's report, but forecasts still suggest significant price drops are on the way.
Source: Reuters
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