There have been January surprises for the commodity markets in many years. These usually come in the form of USDA’s final Crop Production report of the season.
Current corn and soybean prices reflect, in part, the large U.S. crops just harvested. NASS, the National Agricultural Statistics Service, will release the final estimated size of those crops the second week of January. The estimates will reflect acreage and yield information collected in the large scale December Agricultural Survey. Any changes found from the November corn and soybean acreage and yield forecasts could substantially alter the production estimates and influence price going into the spring says University of Illinois agricultural economist Darrel Good.
Some hint about the magnitude of the final planted acreage estimates is provided by the planted acreage reports provided by producers to the USDA’s Farm Service Agency (FSA). For 2015, FSA has released the summary of planted acreage reports as of November 1. The November NASS estimate of planted acreage of corn was 3.9 percent larger than the November FSA report of acreage. That is higher than the final margin for the period 2007 through 2013, but lower than the final margin of a year ago. For soybeans, the November NASS estimate of planted acreage was 2.4 percent larger than the FSA report of planted acreage. That is within the range of final margin in the previous eight years.
FSA will update planted acreage December 14th and make a final report about January 15th. Those reports are likely to show slightly larger acreage thinks Darrel Good. If this is the case, the larger FSA acreage reports would lower the current NASS/FSA acreage margins, making those margins very consistent with historical final margins.
Quote Summary - The bottom line, then, is that FSA acreage reports to date and the recent historical relationship of November and final FSA acreage reports suggest that the final NASS estimates of 2015 planted acreage of corn and soybeans to be reported in January will be very close to the current estimates.
Estimates of harvested acreage, says Good, could change marginally based on the December Agricultural Survey results. Even so, he doesn’t anticipate the final yield estimates to be below the November forecasts. There is plenty of historical support for this position. In the 40 years from 1975 through 2014, the NASS November corn yield forecast exceeded the October forecast (September forecast in 2013) as it did this year, 25 times. In 17 of those 25 years, the January yield estimate equaled or exceeded the November forecast. That number is 19 of 24 for soybeans.
Quote Summary - Our expectations about final NASS acreage and yield estimates suggest the final production estimates will be close enough to the November forecasts that price prospects will not be altered.
This then should put the spotlight clearly on acreage expectations for 2016. Here’s Darrel Good’s take. He writes in the Weekly Outlook on the Farm Doc Daily websites that the “persistence of low prices into planting time might result in a marginal increase in corn acreage and a marginal decline in soybean acreage.” Trend line yield would produce smaller crops for both corn and soybeans allowing some draw down in corn stocks, but keeping soybean stocks historically large.