The USDA Report: How this could influence 2023 grain marketing
Read Time: 5 minutes
By the Cargill Elevate team March 13, 2023
What to watch as you update your 2023 grain marketing plan
As we dive into the importance of the March 31 USDA report, you may be thinking, “These reports come out every month so why should I pay specific attention to this one?” Using surveyed data and trendlines, the USDA will try to produce a rough estimate of how many acres of each commodity are expected to be planted before equipment has started rolling, and it can largely impact prices for these commodities going into the growing season. As we’ve discussed in our last article on historical seasonality, March through June is a time of increased volatility in the market due to weather and planting conditions so how the market reacts to this report can have a large impact on your marketing plan.
The wildcard is what the final acreage number will be, as it is purely survey-based. This report is the first USDA report of the year that has a major impact on the year ahead and acts as a benchmark for how the market will react in future reports.
What factors could impact the outcome of this report?
There are several key factors to watch before the March 31 report is released.
Soil and weather conditions
One major factor is weather and soil conditions as we approach planting. The current subsoil moisture levels at this time of year can dictate what we might expect from the estimated acres on this report. If it’s overly dry or wet before planting, expected yields could be down which would elevate prices.
Corn/bean ratio
You’ll also want to pay attention to the corn/bean ratio. That is the ratio between the November 2023 soybean futures reference month and the December 2023 corn futures reference month. This number can be largely dependent on those “fringe” acres and a majority of those fringe acres can flip easily closer to planting, impacting the corn/bean ratio. If the current ratio holds, we should see an increase in corn acres compared to last year and a decrease in bean acres compared to last year. How would a change in this ratio affect you?
Let’s say we get some late weather in April/May that delays planting. This typically means more soybean acres due to corn not getting in early enough. This would be price positive for corn as corn acres would likely be lower than the expected estimate from March 31. This situation, however, would mean a negative impact on the price of beans because acres would increase accordingly.
When this report comes out, keep an eye on that ratio along with the final acreage numbers because, as we get closer to spring planting, weather can play a big role in changing those numbers.
How can you prepare in advance?
Now that you know what to watch out for, you can feel better prepared going into this report. Getting caught up in percent sold for both old crop (just harvested) and new crop (to be planted this spring) to a position you are comfortable with can go a long way to protecting your profit and preparing you for any outcome. By positioning yourself to a comfortable percentage sold, you are locking in profitability on your overall average sales price, no matter what the outcome of this report will be.
Once the numbers are released, strategize more of your spring sales based on acreage estimates and how those numbers impacted commodity prices.
Reach out to your Cargill Elevate team or your local Cargill rep to discuss these reports and their outcomes in more detail.
