Chicago corn and soybean futures have both tumbled about 8% over the last month, the biggest downturn for this time of year since 2018, when the U.S.-China trade war was escalating.
But these losses, paired with big short bets from large speculators, could discourage further downside on Friday if the U.S. Department of Agriculture's often-unpredictable stocks and acres reports show larger numbers than expected. The data is due on Friday at noon EDT (1600 GMT).
U.S. corn and soybean plantings will headline, and analysts predict USDA's June survey will show slightly larger plantings of both versus the March survey. The larger June scenario has played out in six of the last 10 years, but in different years for each crop.
However, analysts have recently had a tough time with June acres, as the soybean number has fallen outside the range of guesses in four of the last five years (not 2020). Corn acres have landed outside the range in three of the past five years (not 2021 or 2022).
USDA's June soybean acres have come in below the average trade guess for nine consecutive years, an exceptional streak. Analysts have missed by wider margins in recent years, as their guesses have been at least 1% too high since 2019 and as much as 5% too high, happening in both 2019 and 2023.
June corn acres have landed above the trade estimate in six of the past 10 years with the biggest misses occurring during anomalous years like 2019 and 2020. But the trade guess was 2.4% too low last year, which was devoid of widespread planting delays or financial shocks.
Analysts nailed soybean acres in March 2024 and corn came in at the low end of expectations, though there is no relationship between March trade biases and likely June outcomes.
The trade pegs U.S. corn plantings at 90.35 million acres for Friday with a range of 89 million to 91.3 million, and soybeans are seen at 86.75 million acres, ranging from 85.5 million to 87.5 million. Both ranges are on the small side compared with recent years.
U.S. grain stocks will also be a key item on Friday, and the trade predicts corn stocks at four-year highs for June 1 and soybeans at two-year highs. The last time June 1 soy stocks were truly bearish relative to expectations was in 2016 and for corn it was in 2020.
PRICES
The June stocks and acres reports typically ignite more price volatility than on any other major USDA report day since they overlap the height of the U.S. weather market. The smallest percentage move in CBOT December corn on this day in the last five years was a 4.3% decline in 2019.
The analyst bias on corn acres is by far the most influential factor on the session's prices, though traders can quickly move on to the U.S. weather forecast, especially if it is showing something much different than in previous days.
Crop conditions are at four-year highs for the date and weather forecasts this week have suggested a largely nonthreatening pattern for the Corn Belt into early July, though more rain for parts of the already-waterlogged west presents some concern.
Fund-positioning could be significant to Friday's price action as money managers hold large net shorts in both CBOT corn and soybeans, which is relatively uncommon for late June. December corn has not closed lower on this report day in the four years where funds were bearish, and two of those years featured both larger-than-expected corn stocks and acres.
There are also four other years since 2006 where funds were short beans at the end of June, and report-day price action was negative only once, in 2018 during the trade war. But 2024 is similar to 2018 in the timing of funds' bean sell-off, which has come earlier than normal.
Source: Reuters (Writing by Karen Braun, Editing by Matthew Lewis)