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Markets End Limit Up After USDA Report

Market clearly reacted positively to report but from fundamental and balance sheet outlook

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Young corn growing field planting VIA PIXABAY Feb 2021

Markets End Limit Up After USDA’s Planting Intentions Report

  • USDA surprised the market with its US acreage intentions report with corn and soybeans ending limit up for the day.
  • The agency pegged US corn plantings at 91.1 million acres, which was below the lowest value reported in trade expectations by Reuters.
  • Corn area would be above last year’s plantings at 90.8 million but still is a long shot from easing the tightness of the balance sheet.
  • Soybean plantings were forecast at 87.6 million acres, which was below the average expectation at 90 million acres.
  • Like corn, the bean acreage outlook is not large enough to ease the tight supply situation that we currently are facing.
  • Winter wheat acres were the surprise as acreage came in higher, but KC and Chicago were pulled higher thanks partially to the strength in corn.
  • US spring wheat area is forecast at 11.7 million acres, which was near expectations at 11.6 million and is overall supportive for Minneapolis.
  • But, wheat markets did not close limit up for the day.
  • Canola futures closed limit up on Wednesday despite USDA forecasting US acres at a record 2.1 million.

FBN’s Take On What It Means: The prospective plantings report was supportive. The market clearly reacted positively to the report but from a fundamental and balance sheet outlook, USDA’s acreage forecasts for the US are not pointing to bearish situations for the coming crop year.

FBN
FBN

US Planting Weather Outlook

  • The forecast for the coming month sees relief to dryness in both the northern US Plains and Canada’s Prairies.
  • Southeastern states will trend drier and warmer than normal, which should lead to firmer soil conditions.
  • Drying is also expected in the central and southwestern US Plains and in much of the western US.
  • Temperatures are projected to be normal to slightly above normal across the Midwest.
  • Concerns will remain over the potential for the development of drier conditions this summer.
  • If a strong high pressure ridge builds and remains in place, the drier bias in the Plains and possibly the Midwest could accelerate.

FBN’s Take On What It Means: The change in the weather will be very welcome and beneficial for spring planting, except possibly in the west-central or southwestern Plains where quick drying could bring back some moisture stress concerns. The potential for faster expanding dryness exists, but the probability is low for now. The situation needs to be closely monitored and farmers may want to be prompt about getting crops planted in case it turns dry sooner rather than later.

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