Extended forecasts for additional moisture across much of the eastern portion of major U.S. soybean areas have stoked buying interest in the Chicago futures market in mid-June. As of June 9, the U.S. Department of Agriculture (USDA) estimated that just 60 percent of intended 2019 U.S. soybean acres had been planted. This was the slowest pace in data adjusted for the date since just 59 percent was estimated to have been planted in 1996 and is trailing last year’s pace by 32 percent.
The concern for the market is that not only are acres at risk for not being planted, but that those acres that are seeded late may be susceptible to lower yield potential. The U.S. corn market had been grappling with similar concerns, and USDA’s June World Agricultural Supply and Demand Estimates (WASDE) report confirmed concerns as the agency cut expected planted acres and lowered its yield expectations.
On the sidelines of meetings in London, USDA’s chief economist Robert Johansson pointed to likely seeing changes to the agency’s U.S. soybean production forecast in the July WASDE report. Changes to acreage are actually to come sooner with the agency’s annual acreage report scheduled for release on June 28.Forecast yields cannot be adjusted until the July WASDE report is issued.
Conventional wisdom points to farmers switching their efforts from corn to soybeans when spring plantings are delayed. Somewhat muddying the outlook this year are changes that may make it more attractive to leave acres unplanted – to claim Prevented Plantings – in order to collect insurance payments, and through newly-passed government disaster relief payments.
These wrinkles are expected to keep the debate ongoing until the calendar turns to July. Despite the discussions of potential new-crop production, the USDA also increased its projection of record carry-in stocks in its June WASDE which will help to curb the price impact of any shortfalls.
