Market Update from Brian Stevenson:

For one of the biggest reports of the year, the June 30 USDA acreage report showed lower than expected planted acres, making a positive market response for both corn and soybeans. After significant market volatility over the last few years and rising drought concerns across key growing areas, Brian Stevenson, General Manager at B. Stevenson Associates, LLC and Grain Consultant for AGI SureTrack, says, “Things are just kind of interesting.”

Following the March USDA prospective planting report, The U.S. Department of Agriculture’s National Agricultural Statistics Service (NASS) surveys and collects total planted aces from nearly 90,000 farm operators at the beginning of June. Historically, the June 30 USDA report is a market mover, leaving a surprise for many. 

As Stevenson continues to analyze market volatility and risk, he says one assumption is at the forefront: world demand continues to grow, and food security remains vital. “We talk about food security, but the rest of the world talks about how to get enough,” Stevenson says. “I think using for a purpose will drive differentiation grains.”

The biggest surprise in the June 30 USDA report was the reported corn acres planted. With an estimated 92.7 million acres planted in the June report, that was an increase of nearly 1.5 million more acres planted from the March planting intentions report. With a 2% increase from the 2020 planted acres, the 92.7 million planted acres reported on June 30^th left the corn finishing limit up on June 30.

As for soybeans, 86.7 million acres were reported for 2021, up nearly 5% from last year and right in line with the March 1 USDA acreage estimate. With the recent USDA report showing production forecasts, Stevenson says there are some significant soybean production and carry-out challenges for the United States, with low production forecasted and foreign production competition. With the gross domestic product (GDP) increases double digits in five or six years, meeting market demand becomes a significant concern.

Stevenson says, “We’re projecting 50.8 bushels per acre in 2021 and we’ve still had a 140-million-bushel carryout (three million tons) and the Chinese take 100 million tons. Stevenson says with the U.S. supply and demand challenges, two scenarios could happen. “If the demand stays the same and we can meet the 2019, 2020 yield average at 47.4 bushels per acre, we will run out of beans and if the demand goes up three to four million tons, once again we can be out of beans.” Pricing beans out of the market is not easy, Stevenson says.

Stevenson says you’re not going to tell ADM they can’t have beans, or you’re not going to tell Kraft Heinz they can’t have bean oil, and you’re not going to tell McDonald’s that they can’t have vegetable oil. He says, “The main question is, is how to rationalize the supply.”

As market fluctuations continue and the current soybean supply challenges hold true, locking in prices on 2021 production looks to be a very challenging, but rewarding task for many U.S. producers.

“If yields go down, prices will go up. If demand goes up, prices will go up,” Stevenson says. “If we get another run in prices, my advice to farmers would be to take some of the risk of the table. By not selling, you’re actually increasing the risk.”

To visit more with Brian Stevenson about the June 30 USDA report and market challenges or opportunities for both corn and soybeans, contact Brian at BStevenson@Gmail.com.  

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