Traders may have hit the bullseye on their quarterly grain stocks forecast, but they missed the target completely in terms of their predictions for planted acres in corn and wheat.
“The big shock was in the acres report,” said Jerry Gulke, president of the Gulke Group in Chicago, speaking with Farm Journal Radio after USDA released its grains stocks and Prospective Planting reports Thursday. “Last year, we planted 88 million acres, and this year’s estimate is 93.6 million… that’s almost 4 million acres more than the average trade guess. There were a lot of people who were wrong, and wrong big time.”
Soybean acres, which were expected to rise, stayed very close to last year, slipping less than 1% to 82.2 million acres, contrary to the average trade guess of 83.057 million acres. Experts “were thinking soybean acres might be up a little bit over last year,” Gulke said. “It would make sense. All we heard about was how financially unable we were to plant the high-priced stuff (like corn)… But (the talk) was always (about) the other guy: ‘We don’t think so-and-so has enough money to plant corn, so he’ll plant beans.’”
While everyone was talking, though, plenty of farmers were deciding to plant corn.
Those intentions turned out to be accurately reflected in the Gulke Group's own proprietary survey. "This year what we saw in our survey was a consistent increase in corn acres across all areas, from North Dakota to Texas and California to New Jersey," says Gulke, whose firm predicted a 6 million acre increase in corn acres in this report, which was far closer to USDA's actual 5.6 million increase than other analysts.
The other shocker, according to Gulke, proved to be spring wheat acres, which at 11.3 million acres, came in 1.5 million acres lower than the trade’s forecast. Where did those acres go? Into corn, Gulke predicted.
Listen to Gulke's full comments here: