Is Prospective Plantings a Big Deal?
Mar 29, 2016
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This Thursday the USDA will release the Prospective Plantings and March 1st Quarterly Grain Stocks reports. Historically, this pair of reports can produce big market moves and set the tone for months to come. This year there are burning questions about what the final acreage mix will look like. But, how much insight will the Prospective Plantings report give us?
There are a lot of conflicting factors going into planting this year. On one hand corn holds a much better price relationship to soybeans than it did last year, on the other hand with low prices farmers (maybe more accurately lenders) would like to keep risk down and soybeans have lower cost of input and therefore offer less risk. What does seem clear is that wheat acres will be down and row crops could be a bit higher compared to last year. There are also the acres that went into Prevent Plant last year due to the wet start to the growing season which could also mean more acres for the row crops.
So, there is a difficult decision to be made by many farmers this year. With the recent rally off of lows in corn and soybeans this acreage mix is still a moving target. The relative strength in soybeans may have swayed some acres while delayed planting in the Delta may mean some corn doesn't get in on time. Maybe the largest factor going forward will be the weather.
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This Prospective Plantings report is based on a phone survey done by the USDA. They call farmers at random and ask them what there intentions are. This survey will be at least a month old by the time we see the results. So, this can meant that intentions have changed ( maybe dramatically) since the survey was taken. Also, intentions are great but weather may have a lot to say about the acreage mix too. If we have any significant planting delays we may miss the window to plant some corn and we might have to switch to soybeans. or, if planting goes quickly guys may decide to continue planting corn and take some acres away from soybeans.
While it will be informative to see what the survey says it may not be an accurate representation of what is going in the ground this year. It will give us some insight into what guys are (more like were) thinking going into planting. But, this acreage report should be taken with a grain of salt. Things can and most likely will change a bit by the time we have this years crop planted. The more important report on Thursday might be the Quarterly Grain Stocks Report.
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Give us a call if you would like more info on the strategies we are using or if you would like to set up an account to put a plan in action. Ted Seifried - (312) 277-0113. Also, feel free to give me a call or shoot me an email if you would like to talk about your marketing plan, the markets, weather, or just to visit. Follow me on twitter @thetedspread if you like.
May Corn Daily chart:
May Soybeans Daily chart:
May Wheat Daily chart:
Producers looking to hedge all or a portion of their production may be rather interested in some of the options / options-futures strategies that I am currently using.
In my mind there has to be a balance. Neither technical nor fundamental analysis alone is enough to be consistent. Please give me a call for a trade recommendation, and we can put together a trade strategy tailored to your needs. Be safe!
Ted Seifried (312) 277-0113 or email@example.com
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