After a run to over 90 cents, prices (Dec futures) have since fallen on hard times. Relatively, 85 cents is still good but that’s little consolation to growers that missed some of the 90+ action.
Escalating trade tensions led to the fall from over 90 cents. Prices initially found support around 85 cents but that support is now being tested. Rainfall over parts of the Texas High Plains area over the weekend are contributing to further weakening of prices. The next level of support should be at 80 to 81 cents should the retreat take us that far.
USDA’s Acreage report was released on Friday last week (06/29/2018). For most of last week prior to the report, prices hovered around 85 cents. On Thursday, prices took a pre-report dive to around 83 ½ but recovered a little bit of that on Friday.
Overall, I would view the report as a neutral factor at this point. If anything, the report should be a positive but it sends mixed signals. Here’s a quick summary and comments:
- Acres planted is estimated at 13.52 million acres—7.2% more than last year.
- Acres actually planted are only 49,000 acres higher than what growers said they intended to plant back in March. The big runup in price came too late to influence most planting decisions.
- Actual acres were expected to be more than intentions, but if you take out the 100,000 acres higher in Texas, the sum of acres in all other states is actually less than the March number.
- Actual acres planted are LESS than earlier intentions in 6 states.
- Comparing this year to last year, if you exclude Texas, “non-Texas acres” this year are only about 400,000 acres (but still about 7%) higher than last year.
That actual acres planted are above March intentions is no surprise. In fact, 13.52 is on the light side of what most observers thought acres planted would be. This should offer a little help for the recent skid in prices. The addition of 100,000 acres above intentions and the recent rainfall in Texas may ease concerns temporarily about the Texas crop, however. This is still a weatherdriven market as far as the US crop is concerned. As of July 1, 36% of the Texas crop was in poor to very poor condition.
USDA’s July numbers come out on the 12th. This will include the first US crop estimate based on last week’s acreage number. The market will also be looking at World use and China and India production.