Agricultural commodities can be difficult to predict due to unexpected weather and competing incentives for farmers. Fortunately, there are many tools that commodity traders use to make predictions, including long-term weather forecasts and reports like the USDA’s Prospective Plantings report.
In this article, we will take a look at the USDA Prospective Plantings report, also known as the Planting Intentions report, and how commodity traders can interpret the data.
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What Is the Prospective Plantings Report?
The USDA surveys farmers across the country at the beginning of March to determine how many acres of each crop they expect to plant in the upcoming year. The results of the survey are published in the annual USDA Prospective Plantings report that’s published in late March (usually March 29).
Commodity traders and the wider market use this data when making projections for crop yields over the upcoming year. For example, soybean traders may look for changes in soybean plantings to determine if there will be any meaningful changes in supply over the upcoming year.
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The crops covered in the report include corn, all wheat, winter wheat, durum wheat, other spring wheat, oats, barley, flaxseed, cotton, rice by length of grain classes, all sorghum, sweet potatoes, dry edible beans, soybeans, sunflower, peanuts, and sugar beets; acreage for harvests of oats, hay and tobacco.
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How to Access the Report
The USDA’s Prospective Plantings report can be accessed free of charge and without registration from the National Agricultural Statistics Service (NASS) here. The report is available in PDF, ZIP and text formats, but the ZIP format contains data in CSV formats for automated data analysis.
Here’s an example of a segment of the report for corn area planted by state:
The most important part of the report is the acreage that farmers expect to plant for each commodity. If the number of acres is unexpectedly low, the price of the commodity could increase to reflect the potentially constrained supply. The opposite is true if the acreage unexpectedly increases.
Traders can also get an idea of yield when it comes to less common commodities, such as canola oil, rapeseed oil, tobacco or sugarcane. These data points can be helpful depending on the commodity that traders are interested in analyzing, or the expected variations in the market.
How to Read the Report
Many traders look at the percentage increase or decrease in acreage over the prior year or few years (to account for any temporary variations) and then compare those figures to analyst expectations. These changes may be due to changing incentives for farmers or expected changes in weather conditions.
After the report is priced into the market, commodity traders watch to see if farmers actually follow through and plant the acreage that they anticipated. The updated acreage is updated in the USDA’s June release, which can cause significant price volatility if there are meaningful differences.
Investors may also be interested in the report when analyzing input costs for public companies or sectors. For example, investors in the craft beer industry can find the expected yield for hops used in brewing, while potato yields could influence input costs for fast food restaurants.
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The Bottom Line
The USDA Prospective Planting Report is an important read for both farmers and commodity traders. By looking at the expected number of acres planted per commodity, traders can gain insights into the expected supply moving into the new year. Any unexpected changes in supply could impact price.
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