As we approach a pivotal moment in the 2024 growing season, it is crucial to highlight the upcoming release of USDA’s quarterly Acreage and Grain Stocks reports on June 28.
These reports are well-known for their ability to significantly impact market prices, especially this year, given the uncertainties surrounding weather patterns. With a critical part of the 2024 growing season ahead, it is prudent to maintain regular contact with your trusted risk management advisor to defend your balance sheet.
This Friday’s release of the USDA reports aligns with significant uncertainty in agriculture. Dramatic fluctuations in corn and soybean futures prices in recent week reflect a mixed start to the 2024 growing season. This volatility is projected to persist following this Friday’s release of two pivotal reports:
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the Acreage report, which offers updated estimates of planted acreage and initial harvest projections for 2024, and
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the Grain Stocks report, essential for evaluating the disappearance of corn and soybeans during the March-May quarter.
June USDA reports trigger volatility
Historical data underscores the potential for substantial market movements in response to surprises in these reports, affecting both old-crop and new-crop futures contracts. These trends can also be reinforced by uncertainty about weather forecasts. The charts below show the change in old-crop futures (i.e., “CN” and “SN”) and new-crop futures (“CZ” and “SX”) on the day the June Acreage and Grain Stocks reports are released.
A detailed examination of historical trends uncovers clear patterns in the price movements of different crop types and futures contracts. For instance, in 2023, corn futures exhibited significant weakness, while soybean futures demonstrated considerable strength. There are also instances where the directions of old-crop and new-crop futures diverge, as was notably observed in 2013.
Despite these variations, one consistent finding is the link between the USDA reports’ release and heightened price volatility levels in agricultural commodity markets. These examples are a stark reminder of the potential risks and the need for effective risk management strategies.
Students of the market recognize the significance of these USDA reports as potential triggers for market volatility. By staying well-informed and leveraging insights from historical data and expert advice, farmers and ranchers can navigate this week’s reports and future market volatility with greater confidence and resilience regardless of uncertainties in the market.
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