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COLUMN-Making sense of analyst ideas ahead of USDA’s acreage report -Braun

NAPERVILLE, Ill., June 28 (Reuters) - Predicting U.S. farmers’ plantings of corn and soybeans has proven tough for traders in recent years, as several large misjudgments have caused big moves in already-volatile Chicago futures. Hindsight suggests the struggles are rooted in a wide variety of factors, though this year analysts must decide whether high and rising prices were enough to lure producers to plant more corn than intended, or if steep production costs and wet spring weather had them backing off. On average, analysts polled ahead of the U.S. Department of Agriculture’s June survey peg U.S. corn plantings at 89.9 million acres, up from 89.5 million in the March survey. U.S. soybean acres are seen landing at 90.4 million in Thursday's report, still a record but below March’s 91 million. USDA's statistics service (NASS) will publish this data along with grain stocks at 11 am CDT (1600 GMT). The trade is better at soybean acres than corn in the June report with a slightly smaller average margin between the prediction and actual. Directionally, the bean number is where analysts excel, missing the trend from March in only two of the last 17 years (2021, 2007). Analysts had the wrong March-June direction on corn acres in nine of the 10 years beginning with 2008, though it has panned out in the latest four years. But by magnitude, the trade’s more recent June predictions produced some of the bigger percentage misses in history. There is a higher likelihood that final corn acres will be lower than the March intentions this year because that was the outcome in prior years when corn planting was comparably late. But that trend may not surface in June. Just under half of U.S. corn was planted as of mid-May, well below the longer-term average near 70%. There has not been an instance in modern times where planting was similarly slow and final acres were higher than March intentions, though acres were up from March to June in 2013. NASS began this year’s survey when corn planting was near 90% complete, similar to 2013, though the mid-May pace was slightly slower in 2013. In the last 15 years, June corn plantings came in higher than in March 10 times, six of them by 1% or more. For soybeans, June acres were lower than in March in five of the last 15 years, three of them by more than 1%. Two of those three were the slow planting years of 2011 and 2019. USUAL HAPPENINGS Thursday’s corn acreage estimates lean upward, with 18 of 26 analysts calling for higher acres than in March and just six taking the under. Guesses range from 88.4 million to 91 million, the smallest ahead of this report in five years. Sixteen of 26 analysts predicted a soy decrease from March and six voted for the increase. The estimate span of 88.735 million to 92.4 million acres represents a much larger range than in many past years. Wilder market reactions can ensue when the numbers fall outside the range of predictions, which for corn acres has happened in nine of the last 17 Junes, including 2020 and 2019. Analysts completely missed soybean acres in five of the last 17 years, most recently in 2021 and 2019. The lowest bean guess would produce the third-largest March-June acreage cut by percentage in the last 15 years (2007, 2019), though the comparative corn moves would be less standout. Unlike corn, planting pace for soybeans was closer to normal. However, progress in North Dakota, which plants the fourth-largest U.S. bean area, moved at a record-slow clip. The trade’s 89.9 million-acre corn prediction would be the smallest absolute change from March since 2015 at 0.4%, and the smallest percentage increase since 2013. June corn acres have differed from March by at least 1% for five years running. For soybeans, the expected March-June shift aligns better historically. Plantings of 90.4 million acres would represent a 0.6% decline from March. Excluding 2019’s anomalous plunge, the absolute difference between March and June in the last five years is only 0.3%. If the corn and soy numbers both land on their average trade estimates, it would produce one of the smallest ever March-June shifts in the corn-soy universe, potentially unusual in a year with so much uncertainty and volatility. Karen Braun is a market analyst for Reuters. Views expressed above are her own. Graphic- Distribution of trade guesses for U.S. soy acreshttps://tmsnrt.rs/3bD8gUY (Editing by Matthew Lewis) The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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