When the U.S. Department of Agriculture released its grain stocks report and acreage report on June 28, the sell off of corn futures was almost immediate.
The losses continued to trail off at the close of Monday's marketing in Chicago by another 15.75 cents off September's futures ending the day at $5.31 per bushel.
Even though the USDA report came out with a smaller-than-expected carryover stocks in August 2014, the report surprised the market by claiming U.S. farmers planted 97.4 million acres, the most since 1936.
Soybean planted acres were estimated at 7.7 million acres, slightly less than the market expected.
The corn acres raised eyebrows of market analysts, including Todd Hultman, a DTN grains analyst.
"We were expecting 2 million acres less," Hultman said. "This will be debated for a month or more.
"I'm trying to see the world through their (USDA's) eyes and the only thing I can figure is that the intended planting estimates were too low last March."
He said those who live by the market are more accustomed to solid planting numbers at this point in the year, but expects both the corn acres and the soybean planted acres will be adjusted in the August report.
Meanwhile, he said without a yield-robbing weather event, December futures could fall to $4.87, where he expects that price will find intermediate and long-term support, especially among commercial markets.
But fellow DTN analyst Darin Newsom said during a June 28 webinar that December's price likely won't get that low.
"I think it will hold in the low-$5 range as the market starts to look at weather instead of (USDA's) numbers," Newsom said. "We'll see how hot July is and look at some other issues."
But in the meantime, he said, futures prices will have a bearish weight "over our heads until we see production numbers whittled away."
Newsom said he questions that U.S. farmers planted 97.4 million acres in corn as well as the USDA's estimate of a national average yield of 156 bushels per acre.
"I seriously doubt anyone believes 97.4 million acres," Newsom said. "The whole production issue is questioned. It's going to change."
He said taking the ending stocks on Aug. 31, and adding the USDA's production estimates for 2013-2014 new crop, it leaves an ending stock in August 2014 at almost 2 billion bushels, which matches the surplus in the pre-Renewable Fuels Standard year of 2004-2005.
Those who watch markets were expecting to see corn planted in around 95.3 million acres, with some switched to soybeans, while others declared prevented planting.
When questioned about when USDA would alter its planted and harvested acres estimates, Newsom said, "probably after harvest."
Newsom said that in his opinion, the USDA's numbers were unrealistic.
"This report says that it never rained, the water wasn't standing in the fields," he said. "I'm ready to toss this report out."
Although Newsom said he didn't see anything in the stocks and acreage reports to indicate a bearish move in soybean futures, prices still slipped on Friday and Monday.
USDA said third quarter stocks stood at 435 million bushels, which was about 500 mb lower than the market expected. It marked the third lowest third quarter stock supply in the past 15 years.
Even with demand slipping between second and third quarter, due mostly to a huge harvest in South America, Newsom reminded those monitoring the webinar that first quarter demand consumed roughly a third of the entire year's supply.
Newsom said with the remaining supply on hand, if fourth quarter demand would remain the same as the five-year average it would leave a barley existent supply of 5 mb, or 0.2 percent of total supply.
"But that won't happen," he said, expecting rationing will kick in.
Nevertheless, Newsom said, "We're in a very serious situation. It's going to be tight." Even with rationing, he expects actual supplies will end the marketing year on Aug. 31 at less than 100 mb.
"This should support prices for those with old crop to sell in these last stages of the marketing year," he said.