Anticipating Changes in Corn & Soybean Acreage
Darrel Good, Ag Economist - University of Illinois
Twice a year USDA tries to officially predict how many acres of corn and soybeans U.S. farmers will plant. Todd Gleason has more on the anticipated changes this year as we move from the March Prospective Plantings survey to the June Acreage report.
A pretty good start to the growing season in the middle part…
3:59 radio self contained
A pretty good start to the growing season in the middle part of the country has commodity traders thinking more and more about the number of acres farmers have planted, especially to corn and soybeans. The under current of this collective thought process clearly points to more soybean acres and fewer corn acres. USDA will update the March pre-planting season survey of farmers with more concrete numbers the last day of June. Back in March farmers, with a little USDA data adjustment, said they would sow about 84.6 million acres of soybeans and 89.2 million acres of corn. University of Illinois Ag Economist Darrel Good took a look at the recent historical data - going back to 1996 - to see just how acreage usually changes from March to June.
Good :30 …the final estimate was below the June estimate.
Quote Summary - n the 19 years from 1996 (the first year that farm policy allowed for more planting flexibility) through 2014, the final estimate of corn planted acreage exceeded the estimate of March planting intentions in seven years, in a range of 308 thousand to 3.073 million acres. Acreage was less than intentions in 12 years, in a range of 32 thousand to 1.917 million acres. The direction (although not magnitude) of the change was correctly signaled by the June estimate in 13 years and incorrectly signaled in six years. The final estimate of planted acreage of corn exceeded the June acreage estimate in only five years, in a range of 47 thousand to 750 thousand acres. In the other 14 years, the final estimate was below the June estimate in a range of 28 thousand to 2.014 million acres.
In those same 19 years, the final estimate of soybean planted acreage exceeded the estimate of March planting intentions in 10 years. Acreage was less than intentions in nine years. The direction of the change from March intentions to final acreage estimate was correctly signaled by the June estimate in 16 years and incorrectly signaled in three years.
That is… USDA’s final crop acreage number published in the January Crop Production report followed the direction of the change up or down from March to June for both corn and soybeans in the majority of all the years… however, that’s the whole of the historical account. Things have been a bit different as of late.
Good :44 …could explain some of the changes in the estimates.
Quote Summary - Recent history reveals a checkered pattern of changing corn and soybean acreage estimates from March intentions to the final estimate. Many of those changes may have been related to producer responses to changing prices and/or weather conditions. Not fully appreciated, however, is the role that sampling errors might play in the changes in acreage estimates through the cycle. There is a tendency to view the acreage estimates as precise estimates based on a census of producers. The USDA reports that combined sampling errors are typically between one and three percent. The size and direction of these errors through the acreage estimating cycle could explain some of the changes in the estimates.
As for this year, Darrel Good writes in his online Weekly Outlook found on the Farm Doc Daily website that there seems to be some consensus the June 30 USDA Acreage report will show the combined acreage of corn and soybeans exceeds the March intentions, with slightly fewer corn acres and substantially more soybean acres. He says that logic seems to ignore the likelihood intentions reported in March should have already reflected CRP decisions and close to zero prevented plant acres.
So, for the most part, an expected increase in acreage is based on the perception March intentions did not account for all the crop land acreage. As pointed out in the farmdoc daily article of April 2, 2015, that conclusion should be tempered by recognizing the sampling variability inherent in acreage estimates. Even so, an increase of one to three million acres in the estimate of planted acres of principal crops, mostly soybeans says a Darrel Good, would not be a surprise.