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Turner's Take Ag Markets | USDA Acreage & Quarterly Stocks Tomorrow

By: Craig Turner, Senior Risk Management Consultant

Turner's Take Ag Markets
 
Craig Turner
Senior Risk Management Consultant
Turner's Take Podcast

MACRO MARKETS | According to the US government's final appraisal, the economy shrank at a 1.6% annual rate in Q1 of 2022.  The previous estimate was negative 1.5%.  Q2 estimates will come out at July 28 and it is not looking good. There is a very real change Q2 is negative.  The technical definition of a recession is two consecutive negative growth quarters.  

Some government officials and analyst are saying the recession risk is in 2023.  If the Q2 GDP growth number is negative that will mean the we just went through six months of a recession to start 2022.  

The Fed is aware of the recession risk and they will monitor both the unemployment rate and inflation.  If the recession is weak and unemployment stays low, the market will expect the Fed to continue to raise interest rates to fight inflation.  If the recession is strong, unemployment is rising, and inflation is still raging higher, then the Fed is going to have some very tough decisions when it comes Quantitative Tightening (QT).  The next FOMC meeting is July 26 & 27.  The meeting concludes the day before Q2 GDP is announced.  

 

GRAINS & OILSEEDS | The USDA will release their Quarterly Stocks and Acreage report tomorrow at 11 am central. Below are the analyst estimates. There is always the potential for a big move in corn and wheat when the Quarterly Stocks are released.  Feed usage is hard to track and we only get an official update once a quarter.  Big misses in the corn and wheat estimates are usually due to the market underestimating or overestimating feed use.

Acres have been hotly debated due to high input costs and late planting.  The March report had spring wheat at 11.2 million acres.  Due to planting delays in the N. Plains the trade is looking for 10.85 million acres.  The StoneX official estimate is 10.4 mm acres.  Spring wheat that was not planted in ND and MN most likely went into Prevent Plant.

The other big debate is corn vs soybean acres.  The trade thinks corn pickup up about a half million acres and soybeans went down by the same amount.  Usually when you have high input prices and late planting, you see more soybeans.    

Finally, in the March report the USDA had 180.445 million acres planted for corn and soybeans combined.  The trade has the acreage about the same at 180.427.  That is very close to the 2021 total of 180.552 million acres.  Prices are much higher than they were last year.  Input prices are high too but they are available if producers want to plant.  If acreage does not expand this year then we'll have to assume US corn and soybean acres max out at 180.500 combined going forward.

 

 Craig Turner
800.958.9470 Toll-Free
312.706.7610 Local
312.706.7510 Fax
craig.turner@stonex.com
@Turners_Take
 
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