Pre-Report Analysis for June 30th USDA Reports

Corn: The Grain Stocks report is the biggest wildcard. StoneX continues to believe USDA has overstated feed demand throughout the marketing year, with feed usage estimates that don't line up with livestock numbers or ethanol demand. If they're right, tomorrow's stocks figure could come in larger than the trade is expecting, which would be viewed as bearish. On the acreage side, with an early and mostly trouble-free planting season across the Corn Belt, there's an expectation USDA could add roughly 1 million corn acres from the March estimate. The one question mark is whether the spike in fertilizer prices during planting caused more growers than expected to switch acres to soybeans, but it's difficult to quantify. If USDA reports both larger-than-expected stocks and higher planted acreage, it would reinforce the idea of a more comfortable corn supply heading into harvest and could pressure futures. That said, at today's price levels we're entering an environment where PLC/ARC, ECO/SCO, and other crop insurance products can begin helping support overall farm revenue, so we're not relying solely on futures prices.

Soybeans: Soybeans continue to have the stronger demand story. Domestic crush has been running at a record pace thanks to continued expansion in renewable diesel demand and processing capacity, while exports have remained surprisingly strong late into the marketing year. Those two demand categories have offset much of the increase in supply we've seen this year. StoneX expects soybean stocks to come in only slightly above last year despite record demand, although they do think USDA could add a few hundred thousand soybean acres from the March estimate. If that happens, the market will likely focus on whether demand can continue absorbing those additional acres, which so far has been the case.

Bottom line: Tomorrow's report has the potential to create some volatility. Corn likely carries the greater downside risk if USDA confirms larger stocks and higher acreage, while soybeans have a much stronger demand story that could help cushion any bearish reaction from increased acreage.