According to the U.S. Department of Agriculture's June Plantings report released Thursday morning, U.S. farmers planted 1.5 million more corn acres than the market expected, said an Ohio State University agricultural economist.
The report shows that farmers planted 92.3 million acres to corn, while traders' expectations averaged around 90.8 million.
Carl Zulauf, professor in the Department of Agricultural, Environmental and Development Economics, says the June plantings report has become more important in recent years for a variety of factors, and is especially important this year because of the wet spring.
The June report is bearish for corn, as the market anticipated a much smaller planting due to the well-documented delays in states like Ohio and North Dakota.
The corn plantings figure came in 4.6 percent above last year's final plantings number, which he noted is a significant year-over-year increase.
On the other hand, the department estimated soybean acres at 75.2 million, while the average trade expectation was around 76.5 million. Zulauf said the potential for a smaller soybean crop could support prices in that complex, especially relative to corn. But, the weight of the bearish corn market may not allow the soybean complex prices to increase.
Another important note from the plantings report, Zulauf said, is the total acres planted to corn and soybeans as a percentage of the total principal crop plantings in the U.S. Principal crops include all crop acres, except fruit, vegetables and nuts.
"Corn and soybeans made up 52.3 percent of planted acres," he said. "So, more than half of all principal crop acres grown in this country go to those two crops. If you compare to 1995, it is up more than 10 percentage points. That is a rather substantial shift toward corn and soybeans in the last 15 years."
Zulauf attributed the major shift to corn and soybeans, at least in part, to the 1996 Farm Bill and its "Freedom to Farm" provisions. This legislation largely gave farmers the freedom to decide how to plant their land.
"Sometimes the total effect of policy changes doesn't show up for quite some time," Zulauf said. "This has turned out to be a rather significant policy event from a historical perspective, as the June plantings report further confirmed."
A few other points Zulauf noted from the June report:
* Part of the decline in soybean acres probably can be attributed to a 0.9 million acre increase in cotton, relative to the March 2011 planted acreage report.
* Acres planted to spring and durum wheat was 1.5 million less than the 16.77 million acres reported in the March report. Durum planted acres were down 28 percent.
* Acres planted to barley, oats and sorghum was 0.68 million less than the 11.44 million acres reported in the March report.
* Acres planted to canola, flaxseed and sunflowers was 0.61 million less than the 3.84 million acres reported in March.
* Acres planted to hay was 57.6 million in the June report, compared with 59 million in March.
In terms of the Quarterly Stocks Report, Zulauf said there's more bearish news for the market to digest.
Corn stocks were reported at 3.76 billion bushels, while the market expectation was 3.31 billion. Likewise, soybean stocks at 619 million bushels were 28 million above traders' guesses, with wheat stocks 35 million bushels above expectations.
"All three stocks numbers suggest use was less than the market expected, which are bearish numbers for the market," Zulauf noted. "I would ascribe it to the wisdom that high prices cut demand. We probably saw it in both domestic and export markets, though data to attribute the shortfall in use to individual market segments is not available."
"We presume that when prices are high, customers use less, and I think that's what we saw in this report."
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