What Is a Crop Year?
A crop year is a period from one year's harvest to the next for an agricultural commodity. The crop year varies for each product. The crop year influences the price of a commodity, since the quality of the harvest may differ from year to year, depending on weather conditions and other factors.
- A crop year, which is different from a calendar year, is the period from one year's harvest to the next for an agricultural commodity.
- It influences the price of a commodity since the quality of harvest differs from year to year, depending on weather conditions and other factors.
- The U.S. Department of Agriculture continually publishes reports with supply and demand statistics and forecasts for various crop years.
Understanding Crop Year
Agricultural products have various planting and harvesting seasons. Agricultural products are called soft commodities, which can include the following:
The supply and demand for these commodities can vary depending on economic conditions, consumer demand, and changes in the weather. For example, drought can negatively impact the supply of a particular product and lead to shortages in supply and higher prices.
Due to the timing of the harvests, crop years for most agricultural commodities do not coincide with the calendar year. For example, the crop year for wheat in the United States runs from July 1st to June 30th. The crop year for soybeans runs from September 1st to August 31st whereby planting in the U.S. begins in late April to June. Harvesting soy occurs from September to late November. However, other countries have different seasons depending on the climate. For example, Brazil is harvesting soy in February through May, which overlaps the soy planting months of April to June in the U.S.
Crop years for coffee are even more diverse with three separate crop years: April 1st to March 31st in 13 coffee producing countries, July 1st to June 30th in 7 countries and October 1st to September 30th in 31 more countries. Crop year variation exists because coffee grows in both the northern and southern hemispheres.
Sugar is another commodity with various crop years. For example, in Australia, sugar cane grows for 12 to 16 months before being harvested between June and December each year. The crop year not only differs from the calendar year but also varies from the accounting year. An accounting year–sometimes called the fiscal year–is usually the financial year for an agricultural commodity producer. It can sometimes be the tax year as well. The Farm Business Survey in the United Kingdom says a crop year refers only to those crops (except for certain horticultural crops) wholly or partly harvested during the accounting year and excludes any crop carried over from the previous year.
Investors trade positions in soft commodities, such as wheat or soy. If they're buying them during the planting season for that particular crop, they're typically buying the old crop from the previous year. If investors are buying the commodity during its harvesting time, the supply on the market would be from the "new" crop or the current year.
For some agricultural products, there may be two crops in a year. These timing differences make statistics on worldwide annual production very difficult to collate: any single twelve-month period may encompass a whole crop year in one country but will also include the tail end of the previous year’s crop and the beginning of the next year’s crop.
USDA Crop Year Estimates
The U.S. Department of Agriculture (USDA) continually publishes reports with supply and demand statistics and forecasts for various crop years. These reports show last crop year's output, an estimate of the current crop year and projections of next crop year's production.
For crops that haven't been planted yet, the USDA makes a number of assumptions regarding the coming crop year to make its forecasts. For example, weather is assumed to be "normal" with yields that are similar to those determined by technological progress. A similar assumption is made about government policies and mandates as in the past regarding the coming crop years. Data reported is a measure of output, total supply available, expected use, expected trade, and ending stocks. Data is also broken down per commodity.
Example of Crop Year
According to the May 2019 World Agricultural Supply and Demand Estimates (WASDE) released by the US Department of Agriculture, an abundant supply of soybean was expected for the coming crop year based on weather conditions and other environmental factors that affect production. However, soybean prices were pressured by Chinese tariffs and Swine flu fever in that crop year. As a result, several farmers had shifted use of their land from planting soybean to corn.