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July 1, 2020

Market shocked by June USDA crop reports

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The long-awaited USDA June Acreage report has given some food for thought.

June USDA Acreage Report:

Corn: At 92M acres, the planted area is still +3% year on year. However, 5M acres less than the March estimate at 97M acres. Chicago Corn futures (December) has received support from the reduction in acreage. However, even factoring in the reduced area, supply is likely to outstrip demand in 2020/21, and while weather conditions remain favourable, yield outlooks are positive.

Soybeans: At 83.8M acres, the US soybean planted area is up +10% year on year. The March estimate at 83.5M acres has been revised upward, partially as a result of the reduced corn area. Markets were anticipating a greater increase in the soybean area, and soybean markets have also found support.

Wheat: The total US wheat area has been revised downward again to 44.3M acres, down -2% year on year. The previous March estimate was 44.7M acres.

Crop Conditions:

While the corn acreage has been revised lower, the weekly US crop condition ratings improved 1 percentage point for corn and soybeans up to 73 and 71% good and excellent, providing good yield outlooks.

However, the condition of the US spring wheat crop fell 6 percentage points to 69% good and excellent with 41% of the US winter wheat harvest completed. The wheat harvest in Kansas reached 47%. Forecasts for warm weather, combined with widely scattered showers will maintain crops in good conditions.