A bearish surprise for the grain markets on Thursday morning as estimated acreage for planted corn and quarterly stocks for soybeans were significantly higher than consensus expectations. The USDA released two important reports on Thursday, the Planted Acerage Report and Quarterly Stocks of Grains.

The USDA raised estimated planted corn acres to 92.3 million, up from their March estimate of 92.2 million acres. This also represents a 5% increase in planted acres compared to 2010 and highest planted acreage in the United States since 1944, behind only the 93.5 million acres planted in 2007.

This news surprised experts; according to consensus estimates, planted acres would decrease to 90.6 million acres. These estimates were based on wet conditions and flooding across Ohio and the Missouri and Mississippi river basins.

The largest changes in planted corn acres year-over-year were in Nebraska, up 850,000 acres, Iowa, up 800,000 acres, South Dakota, up 650,000 acres, Minnesota, up 400,000 acres, Texas, down 350,000, and Illinois, down 100,000 acres.

Soybean planted acreage for 2011, was lowered from March estimates of 76.6 million acres to 75.2 million acres. This estimate is down 3% from the 2010 planted acres for the same time period.

Compared to 2010, planted acreage was down by 600,000 acres in Iowa, 400,000 acres in Kansas, 400,000 acres in Nebraska, and 200,000 acres in Minnesota and Illinois, while the largest increases were in Kentucky, Ohio, and the Dakotas. The decrease in acres could help offset rises in ending stocks for the quarter.

All wheat acreage is estimated at 56.4 million acres, down from the March estimate of 58 million acres, but above the 53.6 million acres planted in 2010.

Quarterly Stocks

The USDA released its estimate of quarterly stocks of 3.67 billion bushels, significantly below 2010 estimates of 4.3 billion bushels. However, usage of 2.85 billion bushels for the three-months ending, May 31, 2011, was significantly lower than the 3.38 billion bushels consumed over the same period in 2010.

Soybean stocks of 619 million bushels are 8% higher compared to 2010 for the same period. While quarterly stocks for all wheat were reported lower by, 12% compared to 2010, to 861 million bushels

Biotech

The USDA also provided its annual update on the adoption of biotechnology seed use. The USDA estimated that 88% of corn acres planted in 2010 were planted with a biotechnology variety seed, compared to 86% last year, and up from roughly 27% in 2000.

Outlook

Based on Thursday’s report, we believe that all commodities will be fighting a strong headwind to advance based their earlier highs. However, given lower ending stocks in corn and lower planted soybean acres, weather over the next 60 day will play an even larger role in determining yield potential of the 2011 crop.

- Colvin