What Does USDA’s Prospective Plantings Report Tell Us?

What Does USDA’s Prospective Plantings Report Tell Us?

 

Last week, March 31, USDA released it 2016 Prospective Plantings and the Quarterly Stocks reports and the market reacted quickly to the numbers. Especially in the corn market. USDA reported farmer intentions to plant 93.601 million acres of corn, 3.629 million acres more than the trade expected and 4.802 million acres more than 2015’s Prospective Plantings. The 5-year average corn planting intentions is 92.638 million acres. Thus the 2016 corn planting intentions is only a little less than 1 million acres than the 2010-2015 average. 2016 soybean planting expectations are for 82.236 million acres compared to the 2015 intended soybean acres of 82.650 million acres. Both numbers are well above the 5-year average of 79 million acres.

 

These numbers would tell us that corn and soybean stocks are likely to remain nearly constant for soybeans and could increase for corn assuming trend-line yields. But we all know that plans will change due to on farm factors like weather. The changes raise the question whether the Prospective Plantings report is an accurate predictor of final planted acre numbers. I’ll cover a couple of reviews of the Prospective Plantings report to help answer that question.

 

Figure 1 below shows the distribution of error of the Prospective Planting report compared to final planting acres. The Prospective Plantings report is within ± 3% of the corn planted acres, 2 million acres, 95% of the time. The error is less than 1 million acres, 1.48 % of the acres, 45% of the time for corn. In soybeans 80% of the time the Prospective Plantings report is within 3% of the final planted acres, less than 2 million acres. The Prospective Planting report was an accurate estimate of corn planted acres except in periods of acreage contraction when the Prospective Plantings report over-estimated planted acres. The average error in corn was 1.48% and 2.1% for soybeans during 1996-2015. But these errors are not statistically significant.

 

USDA has also reported error in the Prospective Plantings compared to actual planted acres. For the same time period as Isengildina-Massa used. Their average error was 1.9% for corn and 2.1% for soybeans. The error for milo was 9.3% and 1.7% for winter wheat. Seven times the final planted corn acres were below and 13 times above the Prospective Plantings report. Soybean final plantings were above 9 times and 11 times below the final planted acres

 

Taking these two reports together, the Prospective Plantings report is a very good predictor of at least the corn, soybean and winter wheat acres. Of course yields will have a big impact on corn and soybean stocks.

Source: Isengildina-Massa, O. “What Do Prospective Plantings Tell Us About Planted Acreage?” farmdoc daily (6):59, Department of Agricultural and Consumer Economics, University of Illinois at Urbana-Champaign, March 25, 2016.

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