In anticipation of the upcoming corn and soy season, Indigo has released its U.S. planting intentions report for 2020; the company projects 94.9M acres of corn and 84.1M acres of soybeans will be planted this year.
Of note, in this analysis, Indigo’s GeoInnovation team assumed the same total area planted as the USDA’s outlook last month, 179 million acres. The team’s modeling was focused on the ratio of corn to soy acres within that total planted area.
How did Indigo arrive at its estimates? It built a model with historical market data. Key variables included:
- The difference between stocks of corn and soybeans in December of the previous year
- The realized price ratio between corn and soybeans in October of the previous year
- The futures price ratio between corn and soybeans in February and March of this year
- The futures ratio (item 3) was used as the main predictor, as it proved the most closely related to historical area planted actuals. Backtesting was done with a decade of historical data (data from 2011 onwards).
Market insights in the time of pandemic. No season goes as you expect. There are price plummets, trade wars, agronomic challenges, and changing weather patterns. Take last year: constant rain through the beginning of the season led to a historic prevent plant across all crops, nearly 20 million acres, doubling the previous record. Now, a pandemic looms over the economy.
The farmers’ work, at the start of every season, stays the same: climb onto the planter. Indigo is proud to support producers through our monthly reporting efforts –- powered by Atlas -– to enrich your growing and selling decisions. Reliable and unbiased ag intelligence is critical when commodity markets show volatile swings and ethanol prices plunge.
“Everyone will continue looking at the economics until the moment they plant,” says Rodney Connor, Senior Director of Global Markets and Intelligence, and co-host of a forthcoming Indigo podcast focused on real-time market insights and grain marketing. “February crop insurance prices provide a stable floor while allowing the farmer to look for higher prices. And farmers, then, are also better positioned this year to change acres quickly if the market allows before planting.”
In two weeks, Indigo will release updated yield and total production forecasts for the two most important grain producing regions in South America, Brazil and Argentina. Then, the final update for the South American crop –- including insight into the safrinha crop -– will be released in May. And starting in June, Indigo will offer its first corn and soybean production forecast for the U.S. growing season, followed by monthly updates through the end of the year.
View the report here.
Visit indigoag.com for more information.