USDA: Acreage Significantly Lower - High Inventories - Rising Market Prices The acreage survey by the US Department of Agriculture (USDA) as of July 1, 2020 delivered a surprising result. Compared to the cultivation intentions as of March 1, 2020, US farmers have restricted corn cultivation by 5.4%. This would mean that, with the same yield expectations, the US corn harvest would no longer be estimated at 406 million t but in the order of 385 million t. It is still a harvest at the highest level. There are many reasons for the actual acreage deviating from the original plan
- The sharp drop in corn prices as a result of the Covid pandemic-related reduction in bioethanol production has certainly been a major factor.
- The forward rates well into autumn / winter remained low and no longer promised any return
- At the same time, the soy courses remained in the cellar, so that the usual switch to this alternative fruit did not take place.
- In the northern growing areas , the order was delayed due to the unfavorable weather; the order work was finally stopped.
The reduced use of maize for the drastically reduced bioethanol production as a result of the corona-related drop in oil prices has contributed to the fact that the stocks on June 1 were above average. The acreage for soy has hardly benefited from the reduced maize area. Compared to the catastrophic previous year, 10% more soybeans were sown, but the cultivation plans from March 1st were not met.On this basis, assuming the same yield assumptions, a US soybean harvest of around 112 million t is marginally different compared to the previous forecasts. The 2% reduction in wheat area was confirmed . The harvest is well advanced with 41% of the threshed areas, so that already more secure statements about a low wheat harvest around 50 million tons can be determined. There were significant markups on the stock exchanges . It is assumed that the reduced acreage will contribute to a fundamentally higher level of future price movements. Support comes from the weather forecasts of an upcoming dry season in the central growing areas.
