To say that Tuesday's USDA Acreage report (30 June) contained a few surprises would be a bit of an understatement. Weather challenges in the eastern Cornbelt had everyone thinking that planted acreage would be significantly below both last year's total and planting intentions as published by USDA in March. USDA's estimate of 87.035 million acres was higher than both of those and was 3.4 per cent above the average of analysts' pre-report estimates.

This is the sixth consecutive year that June corn acres have been higher than the intentions on March 31. The old adage was 'If the weather is good, farmers will plant corn' appears to not need the weather qualifier – at lest in the eastern Cornbelt.

There is still a good amount of scepticism about these numbers and some believe there are still 500,000 to one million corn acres that did not get planted. Jerry Gidel of North American Risk Management pointed out today that last year's June report included 1.5 million more acres than were anticipated in March – and those acres eventually disappeared in USDA’s final crop update. But the numbers are official for now and will be traded until proven wrong.

Corn futures were sharply lower all day Tuesday and ended the day at or very near the allowable daily limit change for all contracts through July 2010. All of those contracts ended Tuesday's session within 25 cents/bushel of contract life lows.

USDA's estimated soybean acreage for 2009 was 1.46 million higher than the March 31 intentions estimate but over 800,000 acres lower than per-report estimates. The higher planted area versus USDA's March estimates put some pressure on soybean futures but the driver of this market, at least for now, remains a very tight old-crop supply situation. June 1 soybean stocks were slightly larger than expected but year-end stocks still project to be two to three weeks of usage – a very tight situation that drove nearby July futures higher even as the remainder of contracts fell.

We probably should have seen these increases coming, given the fact that USDA's March 31 forecast acres were nearly six million acres below last year's t4-crop total. Pre-report estimates for Tuesday's report were 4.7 million short of the total. Tuesday's forecasts are only 0.4 per cent lower than last year’s totals. Did we really think that many acres were going back to smaller crops or hay or pasture?

What does this mean for livestock and poultry?

A huge respite from high feed costs. Dr Ron Plain of the University of Missouri told Meatingplace.com, "This is about the best news the hog industry has had all year." And so it is. But it will also reduce the incentives for producers have to reduce hog numbers – an action that appears absolutely necessary for future profitability even with lower feed costs.