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Markets React to High Corn Acres

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A big report out from the USDA's National Agricultural Statistics Service surprised some in the corn market. David Geiger talks to Don Roose, president of U.S. Commodities in West Des Moines to see what happened.
Q: So, what was so big about the report?
A: "Well I think when you look at the report, this is the report the March 31st Acres and Stocks report one of the big four for the year it really sets the tone for the year, at least to start with. The big surprise in the report is the corn acres were up a whopping 5.6 million over a year ago, up six percent, so that's just a number that sheds a negative light on the corn market short term."
Q: Was the market really expecting this for corn.
A: "Well I think when you look at it, the corn market was really surprised. I think the feeling is that the soybean number from an acre standpoint, just a little on the positive side, but really I think we could see an acre shift from corn to soybeans yet, even that out a little bit. Overall, what it really says on the corn acres is we're going to have a burdensome supply of corn next year, without some kind of a weather problem. So, from here forward, if we get these kind of acres, and they're a good starting point. One that you really have to believe, you have to keep your eye on the sky, because that's probably going to be the item that turns the market back to the upside until we get some demand that starts to show up that's a little more aggressive."
Q: Let's switch into soybeans, prospective plantings were slightly lower, but grain stocks are up 15 percent. What's going on there?
A: "Yeah I think when you look at the soybean market, they did try to close a bit higher after the report but when you cut to the chase on it, we have acres just slightly less than a year ago, down 300,000 but those are still acres that are probably large enough to give us a burdensome supply of soybeans going forward and when you look at the stocks number, that's the one that you have to be a little bit concerned with. Because we have 200 million bushels more soybeans as of March 1st than we had a year ago so we have got a buffer for acres but then again, just like the corn we have a probability that we could see some acres switch from corn to soybeans yet. Maybe not a big deal maybe one to two million and that really levels the playing field out and puts both of them in a bearish category."
Q: Now, Don, we just have a little bit of time left, can you tell me what's going on with hogs and cattle?
A: "Well, the cattle market and the hog market reacted a bit to the grain stocks and acres report but the cattle market and hog market are looking forward to some better demand as we're getting closer to the grilling season and so I think the underlying belief is, from our standpoint, is we're going to start a little bit of a seasonal rally. We did trade cash cattle so far this week down another two dollars versus last week. But we're at some support and we can see if we can get some growing demand underneath the market."