COLUMN-Making sense of analyst insights ahead of USDA acreage report -Braun

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Band Karen Brown

NAPERVILLE, Ill., June 28 (Reuters)Predicting U.S. farmers’ corn and soybean plantings has proven difficult for traders in recent years as several major misjudgments have caused big moves in the already volatile Chicago futures.

The hindsight suggests the struggles are rooted in a wide variety of factors, although this year analysts must decide whether high and rising prices were enough to induce growers to plant more corn than expected, or whether the costs of high production and the rainy spring weather set them back.

On average, analysts polled ahead of the June U.S. Department of Agriculture survey peg U.S. corn plantings at 89.9 million acres, down from 89.5 million in the March survey.

U.S. soybean acres are expected to land at 90.4 million in Thursday’s report, still a record high but lower than March’s 91 million. The USDA Statistics Service (NASS) will release this data along with grain stocks at 11:00 a.m. CDT (16:00 GMT).

Trade is better for soybean acres than corn in the June report with a slightly lower average margin between forecast and reality. Directionally, the bean number is where analysts excel, missing the March trend in only two of the past 17 years (2021, 2007).

Analysts had the wrong March-June direction on corn acres in nine of the 10 years beginning with 2008, though it has been true for the past four years. But by magnitude, the most recent trade predictions in June produced some of the largest miss percentages in history.

It is more likely that final corn acres will be lower than March intentions this year, as this was the result of previous years when corn plantings were comparatively late. But this trend may not appear in June.

Just under half of US corn was planted by mid-May, well below the longer-term average of around 70%. There have not been instances in modern times where planting has been so slow and final acreage was greater than March intentions, although acreage increased from March to June in 2013.

NASS began this year’s survey when maize planting was nearly 90 percent complete, similar to 2013, although the pace in mid-May was slightly slower in 2013.

Over the past 15 years, corn plantings in June have been 10 times higher than in March, including six times by 1% or more. For soybeans, June acreage was lower than March acreage in five of the past 15 years, three of them by more than 1%. Two of those three years were the slow planting years of 2011 and 2019.

USUAL EVENTS

Thursday’s corn acreage estimates tipped upwards, with 18 of 26 analysts calling for higher acreage than March and only six taking below. The guesses range from 88.4 million to 91 million, the smallest before this report in five years.

Sixteen of 26 analysts predicted a decrease in soybeans from March and six voted for the increase. The estimated extent of 88.735 million to 92.4 million acres represents a much wider range than in many years past.

Wilder market reactions can come when numbers move out of forecast range, which has happened for corn acres in nine of the past 17 months in June, including 2020 and 2019. Analysts have completely missed soybean acres in five of the past 17 years, most recently in 2021 and 2019.

The lower estimate for beans would produce the third-largest percentage reduction in March-June acreage over the past 15 years (2007, 2019), although the comparative movements for corn are less notable.

Unlike corn, the planting rate for soybeans was closer to normal. However, progress in North Dakota, which plants the fourth largest acreage of beans in the United States, has moved at a record pace.

The forecast for 89.9 million acres of commercial corn would be the smallest absolute change from March since 2015 at 0.4%, and the smallest percentage increase since 2013. June corn acres differed at least 1% from March for five consecutive years.

For soybeans, the expected shift from March to June aligns better historically. Plantings of 90.4 million acres would represent a 0.6% decline from March. Excluding the abnormal drop in 2019, the absolute difference between March and June over the past five years is only 0.3%.

If the corn and soybean numbers both fall within their average trade estimates, it would produce one of the smallest March-to-June shifts on record in the corn-soybean universe, potentially unusual in a year with so many uncertainty and volatility.

Karen Braun is a market analyst for Reuters. The opinions expressed above are his own.

Chart – U.S. corn acreage, March to Junehttps://tmsnrt.rs/3QSqWQR

Chart – U.S. Corn Acreage, March-Endhttps://tmsnrt.rs/3A8idEp

Chart – Breakdown of Trade Estimates for U.S. Corn Acreshttps://tmsnrt.rs/3xZM3bm

Chart – Breakdown of Trade Estimates for U.S. Soybean Acreshttps://tmsnrt.rs/3bD8gUY

(Editing by Matthew Lewis)

(([email protected]; Twitter: @kannbwx))

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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