In last week's Market Moment, we discussed the balance sheets under a few different scenarios. As mentioned then, acreage and yield will be the two most widely followed numbers in the Crop Production and WASDE reports. While yield may potentially still see delayed adjustments, acreage is the largest component in next Monday's release.
What will make the acreage number so interesting is that the focus for many will be on "planted" acreage. When conducting the analysis for the June Acreage report "Farmers responding to the survey indicated that 83 percent of the intended corn acreage had been planted at the time of the interview, significantly lower than the 10-year average." This comes directly from the report itself. Further, the harvested acres as reported in June were expected at 83.6 million, only 8.1 million less than the 91.7 million acre estimate of plantings.
Why this is so important is that on an ordinary year, abandonment is calculated at roughly 9%. See Planted vs. Harvested Acres Chart above. Abandonment is defined as any ground that is not harvested for grain. This includes any crop that is harvested for silage or other purposes as well as any crop that truly is destroyed due to a crop failure. A typical year would not define the one we are having. In 2012, abandonment grew to 10.2%.
What will make this report interesting is that NASS has commented that all cover crops will be counted as planted acres in addition to what is considered ordinary abandonment. Thus “harvested acres” will likely replace “planted acres” as the numbers of greatest importance in the coming revision. How large can the abandonment number get this year?
Either way, acreage is thought to be lower. How much lower will determine the path forward for corn, soybeans, and other markets. In the meantime, contact us to sort through strategies for managing this interesting path forward.