As crop reports go, this week’s 2013 USDA Prospective Plantings release is one of the big ones. It will give the first official view of the U.S. grain supply for the 2013 growing season. Perhaps more importantly, it will give farmers, agribusiness and futures market participants an idea of where the market might be headed over the next several months.
This report details what row crops U.S. farmers intend to plant this spring and can have implications for the entire agriculture industry, from seed and fertilizer companies and agricultural equipment makers, to the biofuel industry, livestock producers and food manufacturers.
Chip Walen, vice president, education and research at Commodity & Ingredient Hedging, said this report is a transitional one for the markets. “It’s unique in that it helps shift focus from the old-crop marketing year to the new-crop marketing year, so it’s a shift in dynamics,” he said.
The corn and soybean marketing years begin on Sept. 1, roughly coinciding with the start of the harvest.
Also being released on Thursday is the USDA quarterly grain stocks report, which looks at grain usage. The grain stocks report gives the industry a sense of domestic demand, data that’s often hard to come by, especially for corn, Whalen said. “We know what export demand is because we get the weekly export data from USDA, but this gives us a good sense about the feed and residual use from quarter to quarter,” he says.
The grain stocks data will be for the second quarter for both corn and soybeans, showing market participants what demand was like for the first half of the marketing year, said Brian Grete, senior market analyst and managing editor at Pro Farmer. Wheat grain stocks data for the third quarter will be released on Thursday, too.
The plantings and stocks reports are always highly anticipated, but considering that the U.S. had a severe drought that sharply reduced production last year, knowing what farmers are intending to plant and how much grain is left on hand from last year’s short crop will be critical, Whalen and Grete said.
Starting April 1, weekly crop progress data will begin to be released. The first few reports will detail the condition of the winter wheat crops as they break dormancy. Grete said because the hard red winter wheat crops went dormant under dry, stressful conditions, market participants will find out what shape the plants are in as they begin regrowing. In a month or two, this report will detail how quickly – or not – farmers are able to get into the fields to plant corn, soybeans and spring wheat. Once crops are in the ground, the report will track crop growth and eventually harvest progress.
While prospective plantings is one of the most anticipated reports, the production data can carry near equal weight, says Terry Roggensack, founding principal at The Hightower Report.
“The U.S. production reports become extremely important in August, September and October. Those are very important for corn and soybean production,” says Roggensack. “They’re more important because they are the first reports of the year where farmers are surveyed.”
The monthly world agricultural supply and demand estimates (WASDE) report is also influential to markets. Through the growing season USDA will estimate both the size of the crop as it develops and the potential domestic and foreign demand. The final, yearly report is issued in January. In addition to the U.S. crop, USDA also forecasts the size of crops globally, with specific estimates for top agricultural producers, including Brazil, Argentina, China and Australia, among many others.
Finally, the last growing season report that the industry watches is the planted acreage report, which comes out in June. Acreage differs from prospective plantings in that the March report is based on what farmers intend to plant, while acreage is what they actually sowed. The USDA surveys 84,500 farmers to reach their acreage estimate. In 2012, corn, soybeans and wheat acreage was measured as slightly higher than estimated in the prospective plantings report. Corn acreage beat prospective planting estimates even after that report expected the crop to see a 75-year high.
The USDA reports are not the only data available throughout the growing season, but Roggensack says the agency’s releases are the industry standard for a reason.
“A lot of analysts , magazines and marketing people have their ideas on what they think producers will plant,” he says. “However, even the most sophisticated surveys don’t factor in as much data as the USDA. That is the real survey. No one comes close to that type of estimate in the private sector.”
Watch or attend the Ask the Experts panel on the 2013 Prospective Plantings Report Wednesday, March 27.