Plantings intentions skepticism
April 13, 2010
No sooner had the U.S. Department of Agriculture released its much-anticipated Prospective Plantings report on March 31 than some in the trade began to question the numbers, while others viewed the data with much less skepticism. Some doubt is not uncommon with any report, and it’s expected when U.S.D.A. numbers differ from most trade expectations.
The department said U.S. farmers intend to plant 13.906 million acres of spring wheat other than durum in 2010, up 5% from 2009. Durum seedings were forecast at 2.223 million acres, down 13% from 2009. Winter wheat plantings were forecast at 37.698 million acres, down 13% from a year ago but up 2% from the January U.S.D.A. Winter Wheat Seedings report. Intended area for corn was 88.798 million acres, up 3% from 2009 and the second largest since 1946 after the 2007 crop of 93.527 million acres. Farmers intend to plant a record 78.098 million acres of soybeans in 2010, up about 1% from 2009, which was the previous record.
The U.S.D.A. number for spring wheat other than durum was above the average of analysts’ pre-report trade expectations, but the U.S.D.A. estimates for durum, corn and soybeans were below the averages. Market reactions to the planting numbers were overshadowed by U.S.D.A. Grain Stocks data released at the same time, which varied even more from expectations and sent futures prices sharply lower.
The U.S.D.A. overall has an excellent reputation for completeness and accuracy for the bevy of crop and livestock reports it releases, and its data is easily considered the best of any other nation’s agricultural data in the world. But that doesn’t stop the trade from sometimes questioning the department’s data.
Of all the reports done by the U.S.D.A., Prospective Plantings by its very nature could be viewed as one of the least accurate because it mostly reflects the intentions of about 86,000 farmers in the first two weeks of March. With the exception of winter wheat, which is planted in the fall of the preceding year, and of some warmer areas in the extreme south or on the West coast, farmers have yet to put a seed into the ground at the time they are surveyed.
But Paul Meyers, vice-president of commodity analysis at Connell and Company, looked at the data in a more accepting light.
“Farmers have a pretty good idea of what they are going to do,” Mr. Meyers said. Weather tends to change planting patterns only slightly from March intentions to what is actually planted, which is reported in the U.S.D.A.’s June Acreage report, he noted.
“You don’t see huge shifts in June,” Mr. Meyers said. In many cases farmers already are committed to what they will plant because of fertilizer applications or crop rotation patterns, he said. Farmers will tend to delay plantings because of weather rather than switch to other crops.
There is a tendency for farmers to plant more corn and fewer soybeans than indicated in the Prospective Plantings report, Mr. Meyers said, but the change is usually less than 2%. This year, though, he expects both corn and soybean acres could increase from March because total planted area for all crops appeared low.
According to U.S.D.A.’s reliability calculations, March corn planted area estimates have been above the final planting number 12 out of the last 20 years, with eight years below. Soybean area has been above seven years and below 13 years. Spring wheat other than durum has been 10 years on each side.
The Prospective Plantings report is one of the most anticipated U.S.D.A. reports of the year because it’s the first comprehensive, survey-based data available for the current year. Prior to the end-of-March report, the trade had only trend line projections presented at the department’s annual Outlook Forum in February, and a few forecasts from private companies.
The industry now turns its attention to weekly crop updates from individual states and the May 11 Crop Production report that will contain the first 2010 winter wheat production estimate. Traders will have to wait until June 30 for the U.S.D.A. Acreage report to see how close this year’s intentions were to what farmers actually planted to spring wheat, corn, soybeans and other row crops.