Futures crash 4% as US corn plantings surge 4% on trade war

29 Mar 2019 | Andy Allan

Corn futures crashed on Friday after it emerged that the grain will be planted on 92.8 million acres across the US in the next marketing year, up 4% on the previous year to hit a three-year high and 1.5 million acres more than a poll by analysts had suggested.

The rise in corn plantings came at the expense of soybean acreage, which fell far more than analysts expected at 84.6 million acres, down 5% on the year and compares with analyst expectations of 86.2 million acres.

Corn futures fell 4% to a contract low of $3.58/bu on the prospect of rising US stocks at the end of the next crop year in August 2020, and which comes in a globally supply-laden market.

The rise in planted acreage far outweighed a 3% fall in corn stocks on March 1, which stood at 8.6 billion bushels (218 million mt). The trade was expecting a much bigger decline.

Meanwhile, soybean futures largely flatlined, despite a greater cut in planted acreage than anticipated, while March 1 stocks were largely in line with trade estimates at 2.7 billion bu (73 million mt).

The stock levels are the biggest on record for soybeans at the start of the planting season, and the third largest for corn.

Those figures will likely feed into the next WASDE report and come amid surging global corn crops in Ukraine, Argentina and Brazil.

The survey, which is released annually, was conducted in the first two weeks of March and there is still some uncertainty around how much the planting intentions were impacted by floods that affected large areas of the Midwest earlier this month.

“So our producers get a card in the mail and are asked: ‘What are your intentions as of March 1.’ The problem is they have a couple weeks to respond,” said Terry Reilly, an analyst at Futures International, adding it is unclear whether the actual planted figure will rise or shrink from this level.

The corn market has been anticipating a rise in planted area with traders pointing to anything over 92 million acres as extremely bearish for the market.

This year farmers are looking to unwind a significant shift from corn to soybean acres due to an ongoing trade war between the US and China that has wiped $1.50/bu off soybean prices.

And with doubts lingering over whether US state support in the form of the Market Facilitation Program will continue next year, many farmers are preferring to plant corn despite the global outlook for rising supply.

The collapse in futures is good news for investment funds who had built up record short positions in the corn markets.

However, those positions should limit falls further, sources said.