The Wait Is Almost Over
Mar 28, 2014
Hello Pro Farmer Members!
Every year, USDA's Prospective Plantings and Quarterly Grain Stocks Reports at the end of March are highly anticipated, and this year has been no exception. Monday, USDA will release what's very likely to be trend-setting data. Both of the reports have the ability to sharply move markets.
Prospective Plantings: While the acreage battle wasn't as great as in years past, there's still great anticipation toward planting intentions. Most of the pre-report estimates have corn plantings between 92 million and 93 million acres, with soybean plantings expected to be between 81 million to 82 million acres. That obviously would be a big decline in corn acres and a big increase in soybean plantings from last year. A figure outside of these ranges would be market-moving. But take the numbers Monday for what they are -- intentions as of March 1. Intentions can, and likely will, change based on spring weather and price movement. Keep in mind, there was less anhydrous applied last fall than normal so there should be more "swing" acres this spring. That means actual plantings could shift even more than normal from the March intentions USDA releases Monday. As a result, traders will use the March planting intentions as a baseline from which to add or subtract acres as we move through spring.
Another thing to keep in mind is that everyone remembers what happened last year -- including farmers. Because corn yields came in stronger-than-expected for most (much stronger for some) last year despite record-late plantings, producers may be more apt to stick with corn deeper into spring than they would have in the past.
Quarterly Grain Stocks: Corn has been the attention-grabber with this report. Traders have consistently missed USDA's number by hundreds of millions of bushels for several years -- both too high and too low. It's to the point where no one has much confidence in predicting what USDA's numbers will say. That hasn't stopped analysts from guessing, however. The average pre-report trade guess for March 1 corn stocks is around 7.1 billion bu., but the range of guesses in a Reuters survey is 6.861 billion bu. to 7.54 billion bushels. Someone is going to be really surprised on Monday. Throwing complexity into the quarterly grain stocks guessing game this year is uncertainty toward impacts on feed use from porcine epidemic diarrhea virus (PEDV). However, the real threat to domestic corn-for-feed use is in the future, meaning the fireworks may not come until the June or September quarterly corn stocks are released.
The average guess on March 1 soybean stocks is 989 million bushels. The average guess for March 1 wheat stocks is 1.042 billion bushels.
Keep in mind, USDA has a history of "evening out" use over the first two quarters of the marketing year for corn and beans. Coming off record first-quarter corn and soybean use, there is some risk analysts may be shooting too high on implied second-quarter use despite the evidence of strong export and domestic demand.
USDA's reports will undoubtedly move markets Monday. And it's likely they will set the price tone through spring. Be aware of this... and be prepared by making sure your risk levels are adequately covered ahead of the reports.
That's it for now...
... have a great weekend!
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