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What Will Be the USDA’s Corn Acreage Estimate Monday?
Huge is the word being used to describe Monday’s USDA’s Crop Production/WASDE Reports.
Why is it any different than any other August Crop Production Report?
Because of a wet spring, farmers filling out the USDA’s June survey for its Planting Intentions Report still did not have many acres planted. So, USDA resurveyed farmers, in 14 mainly Midwestern states that experienced planting delays this past spring. Those results will be released Monday.
Plus, in its July report, when the USDA pegged U.S. corn acres at 91.7 million, a lot of farmers and market participants had a very hard time swallowing that number.
USDA’s Corn Acres
Here’s what is expected this time (Monday).
U.S. corn acreage is estimated at 87.99 million, according to the average analyst polled by Reuters News. The lowest trade estimate was 83.4 million, with the highest being 89.8 million. So, there is a wide range of thoughts.
For soybeans, the average trade estimate is 81.0 million vs. the USDA’s July estimate of 80.0 million.
Jack Scoville, PRICE Futures Group, says he is looking for acreage adjustments but not really any yield adjustments.
“I think USDA made the economic yield changes in June and will probably stick to them until they get out into the fields for next month. Yields will be most likely less at the end, given the stressful weather right now. But I would think USDA would want to wait to see some real data before adjusting further. Corn area could drop about 3.5 million acres and bean area could go up maybe 1.5 million acres,” Scoville says.
U.S. corn production could total 13.350 billion and 3.195 billion for soybeans, Scoville says. Both of those estimates would be slightly lower than the government’s estimates in July.
Scoville makes reference to the fact that this year’s August report is the first one that the USDA won’t have objective yield information for (ear counts). It was announced a few months ago that USDA will begin objective yield work for the September report.
Louise Gartner, Spectrum Commodities, says that it is safe to say all eyes Monday will be on corn acres.
“I would look for USDA to lower corn acres by about 3 million from last month (pretty much in line with trade estimates). But that really won’t tell the whole story. So many of those acres were planted well beyond the prevent-plant date, and many acres were replanted. I know of farmers who planted corn in late June, hoping for a late fall/delayed frosts,” Gartner says.
Matt Tranel, risk management adviser of Commodity Risk Management Group, says that Monday’s report is one of the most anticipated reports seen in quite some time.
“There are many things to watch, but I’m watching acres, yield, and demand, in that order,” Tranel says. “Acreage is the largest component.”
Tranel added, “What will make the acreage number so interesting is that the focus for many will be on planted acreage. When conducting the analysis for the June Acreage report, farmers responding to the survey indicated that 83% of the intended corn acreage had been planted at the time of the interview, significantly lower than the 10-year average. This comes directly from the report itself. Further, the harvested acres as reported in June were expected at 83.6 million, only 8.1 million less than the 91.7-million-acre estimate of plantings.”
USDA Is Prepared
Lance Honig, USDA chief of the USDA/NASS Crops Division, told the University of Illinois Extension Thursday that his staff, in July, went back to those fields that didn’t get planted to find out what happened to those fields.
“That’s some of the data that we are looking at right now to determine if we need to make any acreage adjustments that we published on June 28, 2019,” Honig said in the University of Illinois Extension interview.
Honig explained that although the magnitude of delayed planting acreage is much greater this year, USDA has procedures in place to handle this type of situation.
Furthermore, USDA staff will not just visit the fields affected but talk to the farmers of those fields to find out what is expected to be harvested for silage or other uses, Honig says.
“So, we do have a mechanism to use to find out what the expected outcome of those planted acres will be,” Honig said in the University interview.
Honig says the USDA relies heavily on the farmer to estimate yield.
“So, they (the farmer) will going to give us their best estimate of what they expect that crop’s yield to be. At the same time, we pull satellite information, looking at the crop from that perspective. We weave all that together,” the USDA crop official stated to the University of Illinois Extension.
Honig pointed out that there are two things to remember about yield forecasting.
First, it’s based on what was going on the first of the month. In this case, the first of August.
Secondly, the USDA assumes normal weather for the remainder of the crop year.
“So, we’re not making any adjustments that might happen out of the ordinary,” Honig stated during the University of Illinois Extension interview.
Gartner sees the USDA dropping corn yields, as weather continues to stress in the eastern Midwest.
“If it (USDA) does lower corn yields, I would look for just 1 or 2 bushels per acre for now. Corn condition ratings are starting to slip and I think will continue to erode, but that will likely show up in a later crop report,” Gartner says.
Tramel disagrees, expecting the USDA to wait to trim yield estimates later.
“The crop is later than normal and thus estimating an accurate yield could be quite challenging. Don’t be surprised if that number is very close to 166 bushels per acre, as previously stated. USDA may elect to take a pass on it until the September or October reports, when more clarity has been given to the crop. We won't truly know the results of the crop until they show up on the yield monitors this fall,” Tramel says.
Report’s Long Tail?
Scoville says that the market will move on from Monday’s data.
“I am not sure the market will believe those kinds of numbers, given the current weather situation. So, I am not sure there will be much of a tail for the market. We are moving to a full-fledged weather market. Corn and bean demand should be cut, both domestic and export, but we already know a lot of that, and I think we have beat the market up a lot on demand concerns, anyway. So, I think that we could rally a bit after the reports even with bearish reports due to the weather,” Scoville says.
A Lot of Data
The Farm Service Agency’s Acreage Report, made up of the acreage recorded by farmers to be eligible for government payments, will also be released at 11:00 a.m. CT, the same time as the USDA Crop Production/WASDE Reports.
Normally, the FSA report is released ahead of the USDA/WASDE data.