Market anticipating estimates will exceed August forecasts
The debate about the size of the U.S. Department of Agriculture (USDA)’s final estimate of the 2014 U.S. average corn and soybean yields continues, with the market apparently anticipating that those estimates will exceed the August forecasts, particularly for corn. According to a University of Illinois agricultural economist, at the margin, the size of the crops will also be influenced by the magnitude of harvested acreage.
“The first acreage issue is the magnitude of planted acreage, and the second is the magnitude of harvested acreage,” said Darrel Good. “The current planted and harvested acreage forecasts are based on the June USDA surveys, adjusted for any new information revealed in the August crop production surveys. The August forecasts were unchanged from the June forecasts. History suggests that final acreage estimates will differ from current forecasts, with the direction and magnitude of those changes being the issue.”
Good said that for the current year, a larger-than-average percentage of the corn acreage in the 18 major corn-producing states was planted late (after May 20). Much of the late planting was in northern and eastern states.
“A late-planted crop, along with the historical tendency for the final estimate of planted acreage to be less than the June forecast, suggests that the final estimate this year will likely be below the June forecast of 91.641 million acres,” Good said.
The USDA’s Farm Service Agency (FSA) released its first report of planted and prevented acreage on August 15. Estimates in that report are based on required acreage certification by those producers participating in federal commodity programs.
Good said that the August report provides little guidance for forming expectations about changes in acreage forecasts by the USDA’s National Agricultural Statistics Service (NASS) for two reasons. First, the FSA report reflects only acreage certifications to date. Those numbers will increase by an unknown amount in future reports. Last year’s experience suggests that the September estimates, and certainly the October estimates, will be very close to the final estimates. Second, the magnitude of prevented acreage that was already reflected in the NASS June acreage forecast is not known.
“While average yield will be the driver of the size of the 2014 U.S. corn and soybean crops, harvested acreage may be marginally less for both crops than is currently forecast,” Good said.