On the last day of March, as usual, USDA released the annual Prospective Plantings report, providing the most comprehensive look to date at farmers upcoming planting intentions. Because it is the first really good public intelligence that the market gets about the size of the upcoming crop, this is always a closely monitored report.
This year, the Prospective Plantings report was full of surprises. Probably the biggest surprise of the bunch was that corn plantings were estimated to be 93.6 million acres in 2016. This would be a pretty healthy six percent increase over 2015 plantings. The real surprise, though, was in how this plantings estimate compared to the trade’s pre-report expectations.
As I said earlier, the Prospective Plantings report is a pretty big deal, so lots and lots of market analysts and consultants put out pre-report estimates of the report’s figures, at least for corn, soybeans, and wheat. A few days before the report comes out, Reuters compiles and summarizes pre-report estimates from 28 firms projecting corn, soybean and wheat acreage. This year’s corn planting estimate from USDA was over 2.5 million acres bigger than even the largest of these pre-report estimates. On average, the trade had been looking for corn planting intentions to come in about a million acres larger than USDA’s 90 million acre figure that was included in the February Outlook Forum. The point of all this is that nobody really saw 93.6 million acres of corn in the cards.
The higher-than-expected corn acreage was matched with soybean planting intentions that were below expectations, which only makes sense. But at 82.236 million acres, soybean planting intentions were not really that far out of line with the trade estimates. The average of pre-report expectations was about 83 million acres; however, a number of publically-released estimates were below 82 million acres. From this perspective, the soybean acres were not that big of a shock to the market.
On the other hand, wheat planting intentions were about as shocking—in the other direction—as the corn figure. All wheat planting intentions were estimated at 49.559 million acres. If this projection holds up, this will be the smallest wheat acreage since 1970. Incidentally, wheat acreage topped out at 88.3 million acres in 1981 and has trended more-or-less steadily lower since.
To view the complete report please click here.