Monday’s Crop Progress report, in which USDA noted that corn planting had made a significant jump to 92% planted, sent farmers, traders and analysts alike down a data rabbit hole. How much progress is really possible in a week that was only OK in terms of planting conditions?
While Michigan was the only state to report prevent plant acres were included in their 21% increase in planted acres, most analysts believe prevent plant acres were included in all state data. Now the trade is trying to figure out just how much corn will get harvested this year, which Pro Farmer’s Brian Grete is calling the “impossible puzzle.”
“This is the impossible puzzle to figure out this year, and there's a million and a half people out there trying to figure it out right now, including those in the marketplace,” he told AgriTalk host Chip Flory on Tuesday. “Normally you would have a very good indication of what acreage is at this point in time. This year, we're still trying to figure out acreage and we're trying to figure out yield at the same time and it is literally the impossible puzzle. Really the only thing that anybody knows for certain is that it's going to be less acres than what we had intended in March and there’s a good chance yield will be significantly below the trendline of 176.”
In its June World Agriculture Supply and Demand Estimates (WASDE) report, the World Ag Outlook Board (World Board) reduced yield projections to 166 bu. per acre. At that time, USDA also took 3 million corn acres off of the planted acreage number. Grete explained that it’s important to understand the difference between the World Board and the National Agricultural Statistics Service (NASS) because it’s likely they won’t have the same projections for quite some time.
“[The World Board] are balance sheet guys, so when NASS comes out with their first crop estimate in August that the yield could be above 166,” he said. “It's very possible and I know that's not going to be very popular if that happens and the market isn't going to treat it really well with prices, but there's a very real possibility because the World Board is not a crop estimating agency.”
According to Flory, the World Board would not have cut yields or planted acres if their models didn’t indicate they should, but history shows NASS surveys could tell a different story. In 1995, the previous record-late planting year, the trend line yield was 125.6 bu. per acre. In June 1995, the World Board projected the yield at 119.7 bu. per acre.
“When we got the first NASS estimate in August, they pushed the yield right back up to 125.6.
By the time we got to the annual production summary in January, the yield for 1995 stood at 113.5,” Flory said. “But conditions went from too wet deep into the season to the rains basically shutting off. By the time we were doing Crop Tour in the third week of August, the there was a full-blown drought, especially in the eastern Corn Belt.”
Weather models indicate that won’t be the case this year, but Flory used the example to explain that two different agencies within USDA can and have projected yield and acres differently.
“On acres, harvested corn acres in May of 1995 were projected at 68.5 million. They went down to 66 million in the June supply and demand report,” he said. “Then the June acreage report put harvested acres at 65 million, so the World Board definitely got the acres pointed in the right direction in 1995.”
Grete points out that price action in 2019 could also mimic 1995.
“We put in an early high, pulled back and then it rallied again through fall,” he said. “I think that that type of scenario is probable or possible this year, because we had such a run. We're up $1 since May 13.”
All this to say that while the June Acreage report has the potential to clear up how many corn acres will get planted this year, that survey is based on June 1 data that includes planting intentions. Back on June 1, Flory notes, there’s a good chance some farmers still thought they might get corn planted, even though Mother Nature eventually told many of the otherwise.
“So, the 3 million acres that the World Board has already taken off of the corn planting projection, the June Acreage report could put some of those acres back on because it will include the intentions,” Flory said.