USDA Prospective Plantings Report
The USDA releases the Prospective Plantings report once a year at the end of March. The report is sometimes referred to as the Planting Intentions report and it is based on a survey the USDA conducts with farmers around the country on how many acres they expect to plant of each crop. The Prospective Plantings missive provides the market with a solid expectation of the size of each crop for the coming crop year. The report is a projection; farmers still need to plant, tend and harvest crops and the weather must cooperate.
The Prospective Plantings report is a tool for commodities traders when it comes to understanding data for corn, soybeans, wheat and cotton. The report includes other crops, as well as those not traded on the U.S. futures exchanges.
The crops contained in the report are as follows: corn, all wheat winter wheat, durum wheat, spring wheat, oats, barley, flaxseed, cotton, rice by length of grain classes, all sorghum, sweet potatoes, dry edible beans, soybeans, sunflower, peanuts, canola, proso millet and sugarbeets.
The report includes the acreage numbers in each state, including acreage for the harvest of oats, hay and tobacco. The USDA also includes a summary of each crop and a summary of the winter weather. This report often sets the tone for grain prices for the season as many traders read and follow the projections.
Key Elements of the Prospective Plantings Report
The most important part of the report is the number of acres that farmers expect to plant for each commodity. A lower number of acres will often cause prices to move higher. One can compare the numbers in the report to the past five years to get an idea of where a crop stands, but it is also important to monitor the acreage numbers compared to estimates from market analysts.
If an acreage number comes in lower than market consensus, that commodity will probably appreciate in value. The further it is away from market expectations, the stronger the price rally. The converse tends to happen if the number is far above expectations – in this case, the price of the commodity in question will likely decline.
The report sets the tone for the trading in the markets for grains and cotton. After the report, it is up to farmers to follow through and plant the indicated number of acres during the season, and there is always a chance that there will be changes and deviations from the report. The USDA releases updated acreage numbers in June, which can cause price volatility. Once crops are planted, all eyes are turned to the weather.
WASDE: Another Critical USDA Report
Each month, the USDA releases its World Agricultural Supply and Demand Estimates Report (WASDE), which is a monthly update on inventories, and supply and demand characteristics of all agricultural markets. This report is an update on the annual Agricultural Projections report. Additionally, the USDA also puts out weekly reports on many individual agricultural markets. All of these reports are available free of charge on their website.