Prospective Plantings
The March USDA Prospective Plantings report establishes acreage estimates for principal crops1 for the upcoming crop year and is intended to serve as a record of the planting intentions, as the report is also known, of the nation’s farmers. Acreage estimates are based on surveys conducted during the first two weeks of March, with 2021’s survey reaching 78,900 farm operators in 48 states. Survey results are analyzed by respective USDA regional field offices before being aggregated at the national level. The report is released on the last business day of March, with this year’s report seeing a March 31, 2022 publication.
USDA Prospective Plantings reports are not revised when acreage is finalized, but rather represent a record of national planting intentions for the upcoming crop year prior to planting.2 The USDA returns to identical metrics of acreage by crop and region in its Acreage report, which is generally published on the last business day of June (this year, June 30). While Prospective Plantings reports the planting aims of the nation’s farmers, Acreage reports the acreage planted3 and serves as a proxy for how well Prospective Plantings reflects the crop year’s observed seeded acreage.
Table 1: Reliability of Prospective Plantings acreage estimates4
| Difference between intentions and estimated final acreage | ||||||
|---|---|---|---|---|---|---|
| Thousand acres | Years | |||||
| Crop | 90 percent confidence interval (%) | Average | Min | Max | Under | Over |
| Barley | 13.50 | 217 | 31 | 401 | 6 | 14 |
| Corn | 3.70 | 1,288 | 32 | 6,171 | 9 | 11 |
| Oats | 11.30 | 149 | 21 | 490 | 5 | 15 |
| Peanuts | 13.30 | 99 | 8 | 216 | 12 | 8 |
| Rice | 11.20 | 156 | 16 | 329 | 11 | 9 |
| Sorghum | 14.30 | 479 | 31 | 1,114 | 11 | 9 |
| Soybeans | 5.50 | 1,633 | 185 | 8,517 | 9 | 11 |
| Sugar beets | 3.50 | 18 | 0.5 | 6.7 | 9 | 11 |
| Upland cotton | 12.10 | 665 | 13 | 2,115 | 12 | 8 |
| Winter wheat | 3.00 | 557 | 21 | 1,242 | 6 | 14 |
| Durum wheat | 37.30 | 256 | 45 | 1028 | 13 | 7 |
Table 1, above, shows the reliability of the Prospective Plantings reports over the last 20 years, comparing the intentions espoused in Prospective Plantings to the ultimately planted acreage for the crop year.
Barley, for example, has a 90 percent confidence interval of 13.5 percent, meaning that 90 percent of intended Barley acreages, as published in Prospective Plantings, fall within 13.50 percent (plus or minus) of observed Barley acreage over the past 20 years. Corn has among the lowest 90 percent confidence interval, indicating a high decree of accuracy of Prospective Plantings corn acreage relative to other crops. On average, over the past 20 years, Prospective Plantings has published an intended acreage for corn that differs from observed acreage by 1,288 thousand acres. Of the past 20 Prospective Plantings reports, nine have underestimated corn acreage and 11 have overestimated corn acreage. Prospective Plantings acreage was within one million acres of observed planting only twice in the last decade, in 2017 and 2019. Durum wheat, with a 90 percent confidence interval of 37.3 percent, is the crop whose observed planted acreage is least well forecasted by Prospective Plantings.
Prospective Plantings 2021 and its impact
The March 31, 2021 Prospective Plantings reported increased national acreage for corn, soy, and wheat compared to observed planted acreage in 2020. Corn was expected to have increased by under 1 percent in 2020 to 91.1 million acres, soybeans by 5 percent to 87.6 million acres, and all wheat by 5 percent to 46.4 million acres.
The report shocked the industry by reporting intended acreage of corn and soybeans below expectations. Polling had priced in expected corn acreage of 93.2 million acres, or 2.1 million acres more than was published in Prospective Plantings. Prospective Plantings for soybeans similarly missed polling expectation.
As a result of lower-than-expected intended acreage as published in Prospective Plantings, both new-crop Corn (December 2021) and Soybean (November 2021) futures closed limit up on the March 31, 2021 trade date. Figure 1, below, shows new crop December 2021 Corn futures closing limit up (+25 cents), a 5.52% price increase, on that date, and continuing a bull market thereafter.
Figure 1: December 2021 Corn surrounding March 31, 2021 Prospective Plantings5
Acreage and its discontents
While the nation’s farmers reeled from a “wild” 2021 Prospective Plantings, the June 30, 2021 release of Acreage brought more surprises, sending corn and soy prices surging again after a volatile June. Acreage was expected to account for the planting that market watchers perceived Prospective Plantings to have missed, upping planted corn to 93.8 million acres and soybeans 89.0 million acres according to Reuters polling. Although Acreage indeed represented an increase in planted farmland relative to the intentions espoused in Prospective Plantings, market expectation exceeded observed acres planted by more than one million acres for both corn and soybeans.
Prospective Plantings 2022
Polling expectations for the March 31, 2022 Prospective Plantings mediated by Bloomberg and Reuters will be finalized in March, though early market watchers have begun to form opinions on the report. Many believe that commodity prices favorable to farmers will support increased acreage, yet farmers will have to contend with the headwind of high input costs and an uncertain interest rate environment.
Liquid Corn and Soybean futures and options at CME Group can be useful for managing your exposure to potential volatility around the Prospective Plantings and Acreage reports. Learn more about these contracts and strategies you can use at cmegroup.com/agriculture.
References
- Principal crops are as follows: corn, all wheat, winter wheat, durum wheat, other spring wheat, oats, barley, flaxseed, cotton, rice, all sorghum, sweet potatoes, dry edible beans, soybeans, sunflower, peanuts, sugar beets, canola, and proso millet.
- Note that winter wheat, which is seeded prior to the Prospective Plantings report, is an exception.
- The report notes yet-unplanted acreage.
- Source: Prospective Plantings (March 2021) USDA, National Agricultural Statistics Service. Underlying data is 2000-2020 Prospective Plantings compared to equivalent Acreage.
- Source: CME Group
All examples in this report are hypothetical interpretations of situations and are used for explanation purposes only. The views in this report reflect solely those of the author and not necessarily those of CME Group or its affiliated institutions. This report and the information herein should not be considered investment advice or the results of actual market experience.
