The U.S. Department of Agriculture is set to release one of its key annual surveys next Monday, which notoriously presents significant forecasting challenges. For the past decade, one trend has emerged consistently: analysts have consistently overestimated soybean acreage. Recently, new-crop Chicago soybean futures were close to reaching yearly highs, but they have since dropped by 5%. In contrast, December corn futures hit contract lows, currently sitting 12% lower than their peak in February.
This period is typically heavy for U.S. corn futures, and with favorable weather forecasts for the Corn Belt, a significant report shock may be required for any drastic market changes. Although this scenario is not the most likely outcome, history suggests it remains a possibility. Predicting the upcoming numbers is anything but straightforward. In the last six Junes, U.S. corn and soybean plantings have often veered outside the pre-report estimate ranges.
Specifically, soybean acres have frequently come in below trade estimates over the past ten years, while corn acres have exceeded estimates in seven of those years, including the last four. Analysts expect corn plantings to be around 95.35 million acres, a slight increase from the earlier March figure. Interestingly, this year’s outlook for soybeans is particularly notable; analysts estimate around 83.655 million acres, a small rise from 83.495 million in March. The shift in sentiment from corn to soybeans likely results from the wet conditions in the east, which hampered corn planting.
Nonetheless, while corn’s profitability has been surpassing that of soybeans, unattractive corn prices could limit any expected acreage increases. Overall, the analyst estimates for corn and soybean acres are more varied this year than in previous years, which introduces a greater potential for significant forecasting inaccuracies.