Recently it has been in the news that US corn planting has been slow compared to previous years. This will impact the corn acreage planted as well as the yields that the United States hopes to achieve. In this post we have a closer look at past cases of slow planting and the subsequent returns after the data has been made avaible on NASS.
The plot below shows all the US percent planted data form 1980 up to the most recent, highlighted in blue. It is clear that the current pace is the slowest on record. The aim is to investigate the return distrubutions in cases where the planting was slow compared to historical planting percentages.
2 Planting Pace
We use a Z-score to determine whether the current pace is fast or slow compared to the previous 10 years of data. The rolling Z-scores with a ten year lookback is shown in the plot below. The thick blue horizontal line at -1 separates those planted percentage values with a value under one standard deviation, i.e. the slow ones. By eye it is clear that slow pace only occurred on a handfull of times since 1990.
3 Events Study
Below we show the results of an events study where we determine the evolution of the corn Z price after a NASS report with a percentage planting number below a given threshold. These threshold values are decreasing negative Z-scores. We expect to see an increasing slope, of the blue shaded region, with descreasing Z-score. This amounts to a greater increase in price for slower percentage planted data. The plots below support this notion.
The table below shows the number of events for each threshold values. As expected, with decreasing threshold we find less events.
- Current US corn planting pace is the slowest on record
- Slow planting pace does seem to have in inverse correlation with price
- Twenty days after the a slow plating report you can expect price increases or around 3%
- What about other pace measures?