Will analysts break their 10-year streak on US soybean acres? -Braun
(The opinions expressed here are those of the author, a market analyst for Reuters.)
NAPERVILLE, Illinois - The U.S. Department of Agriculture next Monday will publish one of its most important surveys of the year, which also happens to be among the more difficult to forecast.
But amid all the noise the June acreage report can create, there has been one constant for ten years running: the trade overestimating soybean acres.
New-crop Chicago soybean futures last Friday were less than 2 cents per bushel away from inking new yearly highs, though they have since tumbled 5%.
Meanwhile, December corn futures notched contract lows on Wednesday, settling 12% off their February high. To boot, the next few weeks are a seasonally heavy period for U.S. corn futures and Corn Belt weather forecasts are looking decent for now.
This means that a much larger-than-usual report shock may be needed on Monday for the corn or bean market to consider a change of course. That's not the most likely outcome, but history suggests it's not impossible.
TRACK RECORD
The upcoming numbers are not easy to predict. U.S. corn and soybean plantings have landed outside the pre-report range of estimates in four of the last six Junes, though not necessarily in the same years.
Soybean acres have come in below the average trade estimate for the last 10 Junes, while corn acres landed above it in seven of the last 10 years, including the latest four.
On average, analysts expect U.S. corn plantings at 95.35 million acres in Monday's report, up very slightly from the March figure of 95.326 million. Ten of the 24 estimates pegged corn acres declining from the March survey, interesting given that whisper numbers back in the spring exceeded 96 million acres.
The average trade guess reflects the typical lean as June corn acres have been higher than in March in 15 of the last 20 years. The latest two instances where June acres were lower happened in 2019 and 2020, featuring one of the wettest Midwestern springs and then the pandemic.
The trend on whether soybean acres rise or fall from March to June is perfectly split over the last two decades. But recently, the bias is for June soybean acres to be smaller than the March ones, having occurred in five of the last six years (not 2020).
That makes this year's expectations interesting as analysts peg soybean acres at 83.655 million acres, up slightly from 83.495 million in March. Fourteen of the 24 analysts voted for a larger June bean acreage versus March.
The sentiment shift away from corn and toward beans since March likely comes as super wet conditions in eastern areas delayed corn planting, potentially favoring soybeans. But nationally, corn planting was average to faster than average for the entire spring.
However, it should be noted that while corn profitability had been significantly better than that of soybeans since last fall, corn prices by themselves were not exactly attractive. This could keep a lid on any corn acreage gains on Monday.
The analyst estimate ranges on corn and soybean acres are wider than in the past couple years, reducing but not eliminating the chance of a complete miss.
Karen Braun is a market analyst for Reuters. Views expressed above are her own.
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(Writing by Karen Braun; Editing by Chris Reese)
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