Solving the Mystery of “Missing Acres” from USDA Prospective Plantings report
Solving the Mystery of “Missing Acres” from USDA Prospective Plantings report.
It doesn’t cut it to just say corn and soybean intentions came up short of trade expectations while cotton and spring wheat came up long. The “misses” were unusually large. On average, trade guesstimates had corn acreage dropping 747,000 acres in 2018. USDA’s Mar. report said the drop would be nearly 3 times that figure!
And soybeans? The Trade didn’t even have the direction right for year-to-year change! Expecting farmers to show intentions for about 900,000 more soybean acres this year, traders and analysts coast-to-coast were stunned to see USDA report nearly 1.2 million fewer acres planned for this spring! Even acreage intended for durum wheat came up a big surprise. Traders had expected them to rise by about 63,000 acres from last year; but instead intentions came in 313,000 acres below last year, a swing of 376,000 acres below trade expectations.
Where will all these “missing” acres go? The answer is partially answered in the table below. In the table below, spring wheat and cotton intentions came in much larger than expected. Not only did spring wheat acreage come in over a million acres higher than expected, even winter wheat acreage came in 188,000 acres higher than what was reported in USDA’s January Winter Wheat Seedings Report. Cotton picked up an additional 857,000 acres compared to last year and that was about 179,000 more than the trade was looking for.
Notice the total of all four major crops combined in the list below (corn, soybeans, wheat and cotton) come up short of last year by 1.12 million acres in column four. Then notice these same four crops come up short of trade expectations by twice that figure! Where will all those acres go this spring?
For one thing, total acreage intentions among all 20+ crops USDA tallies in the Prospective Plantings report came in at 318 million acres, almost 1.2 million acres less than total acres planted to all principal crops last year. Prospective Plantings include already-seeded hay acreage intended for harvest in 2018, so those 1.2 million unaccounted-for acres are apparently headed for veggie crops, new hay seedings, pasture or CRP by process of elimination.
2.1 million acres to “other” crops or nothing at all for 2018. Now back to the last column in my table below – where the trade overestimated combined acreage of the “big four” crops by more than 2.25 million acres. Sorghum, oats, barley, rice and peanuts account for a net gain of just 131,000 among them. That means all told, over 2.1 million acres planted to corn, soybeans, wheat, cotton, sorghum, oats, barley, rice or peanuts last year will either be planted to something else, put back in pasture or entered into CRP for 2018.
The acreage mix can change between “intentions” and actual acres planted. It’s not uncommon at all for USDA’s June ACREAGE report (actual acres planted) to show significant changes in the crop mix from planting “intentions” released in March. Planting weather and/or changing price relationships can shift farmer plans. For now, however, these “intended” acres are the numbers analysts will be plug into supply, demand, stocks and price models until then. In fact, I’ll dial these acreage numbers for corn, soybeans and wheat into my WASDE WIZARD™ price forecasting model in for my next Bare Knuckles column. Stay tuned!
Note to new BARE KNUCKLES followers: If curious about the WASDE Wizard™ price forecasting model itself, check the archives. There’s a video and prior column describing it in detail on my website www.perfectfitpresentations.com
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