USDA Reports Preview

On Friday, March 31, at 11 a.m. CDT, USDA will issue its annual Prospective Plantings report and the Grain Stocks report for March 1, a combination that has generated large price moves in the past.

PROSPECTIVE PLANTINGS

One of the least helpful reports USDA puts out each year that gets a lot of attention is the March 31 Prospective Plantings report. As USDA explains, the report is primarily based on a survey of farm operators in the first two weeks of March. Last year, 73,000 farm operators were invited to participate, but USDA does not say how many responded.

Weather has been the main -- but not the only -- challenge to the accuracy of this report. In the especially wet planting period of 2019, the March 31 report overestimated corn acres by 3.1 million and soybean acres by 8.5 million. In 2020, the ill-timed arrival of COVID-19 brought with it a fear about fall corn prices that took a March corn planting estimate of 97 million acres down to 90.7 million by the time planters got to work.

Ironically, even though the Prospective Plantings report hasn't been the most accurate predictor, the numbers typically command a lot of attention the day the two reports are released. In the past five years, December corn has responded with four double-digit moves in prices, last year's 27 3/4-cent gain being the largest. For soybeans, three of the past five years saw double-digit moves with a 70-cent gain in 2021 representing the largest response.

For Friday's report, Dow Jones' survey of 18 analysts expects producers intend to plant 90.85 million acres of corn, 88.23 million acres of soybeans and 48.69 million acres of wheat. If true, corn plantings will be up 2.27 million from last year, and soybean acres will be up 780,000. Wheat plantings are broken down as 36.32 million acres of winter wheat, 10.90 million acres of other spring wheat and 1.62 million acres of durum.

Dow Jones' survey did not include cotton acres, but it may help to know USDA estimated 10.9 million acres of U.S. cotton plantings in late February, down from 13.76 million acres in 2022.

MARCH 1 GRAIN STOCKS

USDA's grain stocks reports don't often get the attention they deserve from traders, but in my view, are the most important pieces of information USDA provides the grain market and deserve to be a monthly event. In the case of corn, it is widely known that the pace of export sales in 2022-23 has been much slower than usual, down 34% from this time a year ago. DTN's national corn basis, however, remains the strongest it has been in 20 years. Friday's March 1 corn stocks are expected at 7.48 billion bushels (bb) by Dow Jones' survey and, if true, would be the lowest March total in seven years. Because this year's corn situation is so unique, a bullish surprise seems possible.

For soybeans, demand has been active in the first half of 2022-23, and DTN's national soybean basis is the second strongest in 10 years. Dow Jones' survey expects USDA to find 1.753 bb of soybeans on hand March 1, the second-lowest March total in six years. If true, that would be a slightly bearish pace, compared to USDA's ending stocks estimate of 210 million bushels (mb). With soybean supplies historically tight, it wouldn't take much variation in supplies to have an impact on prices.

For wheat, USDA is estimating 568 mb of U.S. ending wheat stocks as of May 31, the tightest finish in 15 years and the lowest ending stocks-to-use ratio in nine years. Dow Jones' survey expects USDA to find 928 mb of wheat on hand March 1, an amount that will support USDA's view of U.S. ending stocks, if true. With supplies that low, it has been difficult to explain why wheat prices have been trading near their lowest level in over a year and will be interesting to see if Friday's report can have some effect on the discrepancy.

After this month's bank failures and rate hike from the Fed, and with Brazil establishing a new corn crop, traders have a lot to pay attention to this time of year but will take a few moments to see what USDA says on Friday. Register now to join us Friday for DTN's 12:30 p.m. webinar. We will discuss USDA's latest numbers and what they mean to markets. Given the history of the March 31 reports, big price moves may be a part of the day's conversation. Register now at: https://ag.dtn.com/….

Todd Hultman can be reached at todd.hultman@dtn.com

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