According to the acreage report released by the U.S. Department of Agriculture (USDA) Wednesday morning, the estimate for the acres of corn planted this year is 87.9 million, compared with 86.5 million last year. The figure is 1.3 million acres below the traders’ consensus estimate of 89.2 million.
In response to the lower-than-expected estimate, the September corn futures contract rallied throughout the day, settling at $3.62 and 3/4 cents, 29 and 1/2 cents higher than Monday’s settle.
As U.S. farmers expedited the planting procedure in response to strong demand and favorable weather conditions this year, grain traders expected an upward revision from the earlier estimate of 88.8 million acres given in the USDA Prospective Plantings Report released on March 31.
According to research by Allendale Inc., a commodity research advisory firm based in McHenry, Ill., this year’s corn planting progress is 7.5 days ahead of the normal schedule, and the current pace implies an upward revision of approximately 400,000 acres by the USDA.
Though acreage figures released Wednesday morning did not reflect the expected revision, some traders remain convinced that there will be a bumper crop this year.
“I strongly believe that more corn was planted than that [the estimate released Wednesday morning],” said Daniel Portillo, a grain trader at HTG Capital Partners LLC., a proprietary trading firm based in Chicago. “The crop conditions were favorable this year, and with a decision pending by the EPA [Environmental Protection Agency], most likely in favor of increasing the ethanol blend, it’s fairly reasonable to assume that farmers increased their acreage.”
Before the end of the year, the EPA is expected to release a decision regarding increasing the mandated ethanol blend in gasoline from the current 10 percent to 15 percent.
According to the World Agricultural Supply And Demand Estimates (WASDE) released by the USDA on June 10, the current forecast for ending stocks in 2011 is 1.57 billion bushels, compared with 1.6 billion at the end of 2010. However, an upward revision of 400,000 planted acres, if realized, could easily push the 2011 ending stocks higher than that of 2010.