How to Prepare for the March 31 Reports

March has been full of big-time USDA reports. With the Crop Production, World Agricultural Supply and Demand Estimates and Hogs and Pigs reports behind us, all eyes are on the March 31 Prospective Plantings and Grain Stocks reports. 

This report is known for a surprise or two, as well as causing some price volatility. What will the data show? How should you adjust your marketing plan? 

“History has shown price volatility can potentially increase markedly in the immediate aftermath of the release of the estimates,” says Brian Basting, economist for Advance Trading. “A disciplined approach to preparing for the report would be to have downside price protection in place prior to the release of the estimates.”

While the report will provide a foundation for 2021 production prospects, Basting says, much can change moving forward. Last year, for example, the final acreage and production numbers for key crops were dramatically different than what was forecast by USDA in March.

“It’s important to remember the crop year for 2021 production will stretch to Aug. 31, 2022, which is 17 months away,” Basting says. “Remember price change happens, and it can be very fast.”

Acreage Battle Brews

At the Agricultural Outlook Forum in late February, USDA shared these 2021 estimates:

• Corn: 92 million acres
• Soybeans: 90 million acres
• Wheat: 45 million acres

The Pro Farmer/Doane survey shows intentions of 93.4 million acres of corn and 88.9 million acres of soybeans. Allendale’s 2021 estimates are for 92.83 million acres of corn and 90.32 million soybean acres. 

Kevin McNew, chief economist for Farmer's Business Network, is looking for corn acres around 94 million acres and soybean acres below 90 million. That’s based on the 2021 FBN Planting Poll report, which includes responses from 1,800 U.S. farmers across seven crops and 40 states. He says key factors driving this include:

1. The Northern Plains, after last year's disastrous prevent plant situation, are coming back strong with corn acres.
2. The Delta will also increase corn acres pulling back on cotton.
3. The eastern Corn Belt states are on the fence, keeping corn/bean acres about on par with last year.
4. Milo acres will increase. FBN projects milo acres to balloon from 5.9 million acres last year to 7.9 million acres this year. “Those acres combined with a 1.6-million-acre increase in winter wheat sowings last fall makes it hard to find a path to 90 million acres for beans,” McNew says.

Of course, weather will have the last say. As of now, most areas are forecast to have a nice planting and growing season.

“The only worrisome region for excess moisture right now is the Delta,” McNew says. “La Niña is waning and may have lingering effects in the first half of the growing season, but nothing yet foretells of drought or heat concerns this summer.”

Market Price Impacts

At a minimum, the market will need to see 90 million soybean acres, and anything less will mean big upside price potential, says Jon Scheve, president of grain with Superior Feed Ingredients. “If beans hit 91 million acres or more, there could be a little downside price risk. For corn, the market is expecting the possibility of nearly 93 million acres. Anything less than 92 million and the corn market could see a nice rally. However, anything higher than 93 million could pull back prices some.”

U.S. farmers have never planted more than 178 million corn and soybean acres once the final number is seen in the June report, he says. “However, the market believes that it’s possible that we will plant 182 million acres this year.”

Historically, over the past 13 years, one week after the March 31 report corn prices have only fallen more than 15¢ once, which was in 2013, Scheve says. Similarly, in the past 13 years, a week after this report soybean prices have been down more than 25¢ only twice, in 2010 and 2013.

“A day after this week's report, the market will be focused on Chinese demand until summer weather risk becomes another big factor impacting prices again,” he says. “The next four months are the most important time of the year because 80% of the world's corn and 30% of the world's beans will be planted and vulnerable to weather issues that affect yield.”

Related stores on the 2021 acreage battle:

Prospective Plantings Preview: Seed Sales Point to 90 to 92 Million Acres of Corn in 2021

Market Braces for USDA Grain Stocks Amid Trust Issues with Past Data

Acreage Battle: Record Fall Fertilizer Applications Need to Factor Into Acreage Debate

U.S. Farmers Prep for Massive Corn Acreage Despite Soy Rally

Crop Insurance Price Guarantees are Jockeying Acres More than the Futures Market