USDA shocks market, projects 1-2% fall in 2018 soy and corn acreage

Planted US acreage for corn and soy in 2018 is to fall 2% and 1% on the year to 88 million acres and 89 million acres, respectively, according to a USDA report released Thursday, blindsiding traders who had expected US soy acreage to hit a record 91.1 million acres.

The front month CBOT soybean contract jumped over 30 cents in the minute after the USDA report was released, trading at a near two-week high of $10.50/bu as the market digested the news that bean acreage would be 2 million lower than previously thought.

The biggest losses were recorded in the states of Iowa, Kansas, Michigan, Minnesota and Ohio, which alone are expected to amount to a cut of 1.08 million acres compared to last year.

Sources warned, however, that the price spike might not last.

"Things change so rapidly with weather, etc that a snapshot from the first two weeks of March can change significantly to final numbers," said Kelly Herrick of Advanced Trading.

Meanwhile, the corn acreage estimate was 1.4 million acres down on trade expectations, news that sent prices up 3.5% to $3.89/bu - also a near two-week high.

The biggest losses in corn acres are expected in Kansas (down 400,000 acres) and Minnesota (down 550,000 acres).

Surprisingly, the USDA moved total wheat acreage up by 3% on the year to 47.3 million acres, well above the anticipated 46.3 million acres.

However, the plantings still “represents the second lowest all wheat planted area on record since records began in 1919,” the USDA said.

The largest increases were seen in the state of North Dakota, which is expected to add 810,000 acres alone, and Minnesota adding 441,000 acres.

Stocks

The shortfall in acreage far outweighed what would have otherwise been bearish record stock numbers, which came in at 2.1 billion bushels for soybean and 8.89 billion bushels for corn as of March 1.

The stocks were 185 million bushels higher than expected for corn and 77 million bushels for soybean.

Wheat stocks were largely in line at 1.494 billion bushels.