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USDA confirms it: Big increase in soybean acres

Kenneth Schulze/iStock/Thinkstock corn field under bright blue sky
Grain stocks for corn, soybeans and wheat top trade forecasts.

The U.S. Department of Agriculture on Friday delivered a double dose of bearish news for soybeans with its forecast that farmers will plant more soybeans this year at a time when there are 200 million bu. more soybeans in storage than a year ago.

The grain trade expected more soybean acres, but USDA’s forecast of 89.5 million was even larger than trade estimates. That increase of 7%, or 6 million acres more than a year ago, will draw acres from corn and wheat, both of which will have smaller areas this year.

Also bearish for soybean prices was the quarterly stocks report, which showed 1.735 billion bu. of soybeans in storage, which topped the average forecast and was up from the 1.53 billion bu. a year ago. Corn and wheat stocks of 8.62 billion bu. and 1.66 billion bu., respectively, were above trade averages and greater than a year ago.

“USDA’s March 31 reports have a well-deserved reputation for surprises, and they proved why again today,” Bryce Knorr, Farm Futures senior grain analyst, said. “Soybeans got a double dose of bearish news. Farmers, as expected, said they want to plant record acres, and their intentions were even more than we found in our survey."

Knorr said growers across the country are moving to soybeans and cutting back on other crops, including spring wheat, sorghum corn. This was especially true in North Dakota, where soybean acreage is expected to be up 14% from 2016, while spring wheat seedings should be down 10%.

USDA said soybean acreage intentions are up or unchanged in the 27 of the 31 states it surveys.

Chicago Board of Trade soybeans for May "traded to six-month lows before the report," Knorr said. "The market is oversold, but the next downside support is $9.3725. A test of that level could trigger short covering, but growers shouldn’t expect any real rallies until we’re well into the growing season."

Near midday on Friday and after the report, May soybeans were down 17 cents at $9.46/bu., and new-crop November was down 8.5 cents to $9.5475/bu. May corn was up 6 cents to $3.635/bu., and December was up 6.25 cents to $3.8725.

Total wheat acreage is expected to be down this year because a drop in the winter wheat area has been known for months. Friday’s report was the season’s first for spring and durum wheat, and it showed spring wheat down 3%, at 11.31 million acres, and durum down 17%, at 2 million. North Dakota, the biggest durum and spring wheat producer, is expected to see a 10% drop in spring wheat acreage and a 21% drop in durum acreage.

“The acreage numbers are slightly supportive for corn. Corn was trending higher just ahead of the report, so there may be fund money deciding to get long today for a weather rally on end-of-the-quarter positioning,” Knorr said. “The stocks number would appear to indicate lower feed usage due to the fairly mild winter and abundant supplies of competing rations.”

USDA’s estimate is “only 68 million bu. above" the Farm Futures projection -- less than 1% -- which is within the range of sampling error, Knorr noted.

“May (corn) futures rallied up to the moving average resistance I suggested in this morning’s report on FarmFutures.com,” he added.

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