As planting begins, talk suggests lower corn acres

By Jason Sagebiel, Intl FCStone | March 07, 2017

Acreage is the talk as planters have begun rolling in the southern U.S. and early comments were voiced at the USDA Ag Forum Conference. In advance of the first planting intention report to be released March 31, Ag Forum projections put corn acreage at 90 million acres, down from 94 million acres planted in 2016 as projections for soybean plantings jumped to 88 million acres. With this type of acreage projections beginning to be released, traders will implement various yield scenarios to start predicting alterations to the U.S. supply-demand tables. 

In the February supply-demand report, the USDA made only minor changes to the corn demand table. Industrial corn usage increased by 10 million bushels while corn use for ethanol increased by 25 million, reflecting robust weekly ethanol production figures. Nonetheless, the current carryout-to-use ratio is 15.9 percent, the highest level since 2005-’06. Ultimately, one would envision this could limit upside opportunities in price action, but there are new and different dynamics in the market today that were not present 10-plus years ago, such as commodities being used for investment purposes.

Global corn production is expected to increase as we await current production data from South American countries. Despite corn production increasing in the February report, global stocks decreased. China increased its domestic usage by 4 mmt, with China’s growing pork industry supporting the increase in corn feed demand by 2 mmt. Overall, China’s carryout declined from 106.31 mmt to 102.31 mmt. Overall global corn carryout declined from 220.98 mmt in January to 217.56 mmt in February. This compares to 210.4 mmt and 209.7 mmt the last two years, respectively. Carryout has increased year on year, but ultimately carryout-to-use has declined, indicating rising global demand. 

Comments in this article are market commentary and are not to be construed as market advice

Corn Futures Prices

(May Futures $) Close/bu Close/ton
March 3, 2017 3.808 135.9821
February 3, 2017 3.728 133.1250
March 3, 2016 3.565 127.3214