Big report day, small reaction?

The big day has come for the Chicago Board of Trade, but so far we don’t know what the results of the reports will be.

At 7:30 a.m. Central time March 31, USDA released the long-awaited Prospective Plantings Report, and the Quarterly Grain Stocks Report. Now we have the numbers.

The reaction comes at 10:30 when the Chicago Board of Trade opens.

Anyone who has talked to me knows I have looked forward to the Plantings report as the driver for one last good chance to sell corn at or above the highs made in January. I have long believed we would get corn acres back toward the traditional level as the prices have dropped, but input costs have not dropped back to normal.

Now I am looking at the numbers, and I find I may be wr..wr..wrong.

Well, I am not exactly wrong, as USDA says we will decrease corn acres and increase soybeans. It is just that their numbers do not incite enthusiasm.

All about the spin

Now, we worry about the twist put on the numbers more than the numbers. It would be easy to write this if the 31st came on Monday. Then I could tell you how the market reacted. I have to file this before the market opens, and by the time it appears, everyone reading it will know more than I do now.

Here is what I do know now. USDA says corn acres will be 85 million, down from 86 million last year. That is good news, but not good enough. There was a lot of talk about a drop of 3 million acres.

The range of guesses by the trade pundits was from 89 to 81.4. That is a huge range, with an average of 84.55. It means that there was divergent opinion about the report, and a lot of room for price reaction.

Now, we have a number higher than the average guess. Hard to believe we see a lot of positive price reaction, except maybe as a knee-jerk in the beginning.

The 85 million acres would be the third largest in modern times. It would reflect demand coming from ethanol, where we will use more than last year, just at very reduced prices.

The acres go only partly to soybeans, where we will plant 76 million acres. That is up just 300,000 from last year.

Interestingly, the Prospective Planting report last year was right on the actual planted acres on corn, but way off on the soybeans. Plantings were estimated at 74.8 million, but we planted 75.7.

If that represents a trend, we now know more about corn acres than bean acres. The actual bean acres are still in doubt, and may be affected by any price reaction to this report.

Short-lived

Farmers who were waiting for this report to help the corn pricing decision are not likely to be happy. We may get a little bounce, but it would seem that the decrease in corn acres should be in the market. That would be represented by the price action of the last month, which has added 40-some cents to May futures in March.

Or, you could look at the 15 cents we have lost in the last few days and say the market was taking protection and we have room for a little bounce to the highs.

The real bullish surprise is likely to be in the soybeans. Yes, acres are up, but not anything like we expected. The trade was looking for an average guess of 79.25 million acres, in this report we got just 76 million. That should help bean prices, even though we have had a sharp upturn in beans for all but the last few days.

And, the best case for corn is that the beans carry the corn higher.

Whatever happens, it will be a two- or three-day wonder. The reaction to reports is always immediate.