USDA Reports Bring Further June Gloom

Jul 04, 2024

By Betty Resnick

On the California coast, “June Gloom” is a phenomenon where the contrast of cold ocean waters and warmer land temperatures brings weeks of grey, drizzly, cool and cloudy days, often making June the least pleasant month of the year. The June Acreage and Quarterly Grain Stocks reports, published on June 28, brought a gloomy overcast to new crop markets. This Market Intel looks at the impact of the report on corn, soybeans and cotton.

Corn

The reports had the most bearish outcomes for corn. Corn came in at 1.4 million (+1.6%) acres above the March Prospective Plantings Report at 91.5 million acres, above all trade expectations. The increase in acres from the prospective plantings report primarily came from the Western Corn Belt states, including Kansas (600,000 acres, +10.5%), Iowa (300,000 acres, +2.3%), Nebraska (250,000 acres, +2.5%) and Minnesota (200,000 acres, +2.5%). Michigan and Wisconsin had planted acreage estimates reduced by 100,000 acres each, -4.4% and -2.6%, respectively. This still represents a 3.3% decline nationally in planted acres from last year, which is reflective of falling corn prices and the high input costs of corn making it a riskier crop for profitability.

As of June 1, 2024, total corn stocks were estimated to be 4.99 billion bushels with 3.03 billion bushels stored on-farm and 1.97 stored off-farm. Total corn stocks are up 22% from June 1, 2023, above pre-report trade expectations. There are some startling statistics that can be pulled from the Grain Stocks report, including that on-farm corn stocks are at the highest level since 1988. While this does not bode well for corn prices, when put into context the numbers look less extreme. On-farm stocks are marginally higher (+0.04%, 1.1 million bushels) than at the same time in 2019, but total stocks are 370.4 million bushels (6.9%) lower over the same period.

Another way to assess the state of corn stocks is to compare stocks to the previous year’s production. As of June 1, 2024, stocks are equivalent to 32.5% of old crop production. This is an uptick from previous years, but below recent highs of 38.6% set in 2020 and well below the historic record of a whopping 81.9% set in 1988. So, while the on-farm stock total does mirror 1988, we are still in a much better position than the dreadful ‘80s.

crop

The unexpectedly large increase in acreage coupled with the quarterly grain stocks number sent corn futures prices tumbling. While December ’24 corn futures have been continuously declining since June 20, on the day of the reports new crop futures fell 13 cents or 3.0%, closing at $4.20 per bushel. Prices held firm on July 1, but have declined a total of 9.8% over eight trading days. Throughout the month of June, December ’24 corn futures fell a total of $0.47 a bushel, an even 10%.

Soybeans

Soybean planted acres are estimated at 86.1 million acres, down 410,000 (-0.5%) acres since the March Prospective Plantings Report. The state-level changes in planted acres between the two reports were more mixed than corn, with Kansas, Illinois, Kentucky and Minnesota each gaining 100,000 acres or more, and Missouri, Iowa, Ohio, South Dakota, North Dakota and North Carolina each losing 100,000 acres or more. Year-over-year, soybean acreage nationally increased by 3.0%.

 

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