Monday morning's release of USDA's March 31st prospective plantings showed producers plan on planting 86.01 million acres of corn. Allendale's estimate of 86.43 million acres was right in the ballpark! USDA's acreage estimate implies harvested acres of 78.31 million acres and using a trend yield of 155.3 bu/acre, it suggests production would be 12.16 billion bushels. With carry-in stocks of 1.422 billion bushels and imports of 12 million bushels, this suggests a total supply of 13.595 billion bushels following the 2008 harvest. Allendale estimates total usage of 13.113 billion bushels, which projects ending stocks of 482 million bushels. This implies stocks-to-use of 4%. Dating back to 1980, the record level low of ending stocks-to-use has been 5%. Tightening of stocks suggests a season average farm price for 2008/09 at $6/bu versus the present 2007/08 level of $4/bu. USDA is scheduled to release its first official supply and demand numbers for the 2008 crop in its May WASDE report.
Since 2004, from the March prospective planting report to the June planted acreage report, USDA has increased corn acreage each year. The average increase has been 1.481 million acre with a low of 179,000 acres and a maximum of last years 2.437 million acres.
The trade's attention is expected to shift from acreage potential to planting progress. USDA is not expected to release its first 2008 planting progress until April 7th. The five-year average for this early period frame is 3% complete, with 39% complete by the 17th week of the calendar year or near April 28th and 80% complete by May 12th. Any delay in corn plantings this year is expected to be bullish corn, bearish soybean futures.
Long term Allendale remains bullish to old and new crop corn given our outlook for reduced corn plantings in the spring of 2008 and record second quarter corn use. Keep your eye on the US dollar and 3 to 5 day weather forecast as momentum indicators.
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