The March USDA Planting Intentions report is a valuable tool, but has on occasions failed to pick up a sizeable chunk of acreage that shows up later and can hurt prices if the yield is average. There have been years where up to 8 million acres used the previous year were not visible in the Principal Crop Acreage numbers in March.
These are somewhat hidden acres and the crop mix can be market moving when they eventually show up. This year was no exception, with 1.3 million acres added to the June 30 Acreage report that were not there in March.
The March Planting Intentions report is still a valuable tool for producers even if it misses some things, because it gives us early warnings about decisions that might harm us. The June Acreage report is valuable because it trues-up the numbers. Soybeans are a case in point. The March intentions of 89.482 million acres revealed a serious developing problem. They were up 6.049 million from the previous year, and trading in the $9.70s after being in the $10.30s. Producers cancelled further expansion plans, and trimmed double-crop intentions (USDA today said 4% of the acreage for 2017 versus 5% last year and 10% back in 2013).
As a result of the early warning, futures were trading within 25 cents per bushel June 30 of where they were in March. It could have been a dollar lower had we gone on to 91 million soybean acres.
Corn has often been the recipient of some of these hidden acres appearing in the June report. In 11 of the past 14 years (and now 12 out of 15), June corn acreage was larger than the March Intentions. USDA found 888,000 more corn acres in the June survey than they did in March. That was still down 3.1 million from last year, and thus helpful to keeping a lid on production prospects. It is not a zero-sum game. In tight stocks years, we talk about corn or soybeans bidding for acres versus the other. In 2017, wheat and cotton gave up a few from their March intentions, but more came from the hidden acres column. The Big Four crop acreage is pretty consistent over time, varying less than 5 million acres since 2012, as shown in the table below.
Wheat has obviously been the acreage donor over the past five years (but actually going back to 1960). Soybeans have been the big gainer both in the U.S. and worldwide. You can thank the Chinese for their tremendous crush demand and its ability to absorb those bushels.
We should also talk about geographical shifts in the acreage. USDA added 300,000 acres to the North Dakota soybean count today, compared to March and they are up 1.15 million acres from a year ago. They found 250,000 more corn acres in North Dakota than they had in 2016. These are very relevant, given the current drought problems in the Dakotas, and the forecasts for much-above-normal temperatures there during the next two weeks.
Getting extra acreage in those locations could actually be a drag on the U.S. average yields and thus production assumptions. We need more time to make that call.
Alan Brugler may be reached at firstname.lastname@example.org
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