Accuracy and Reliability

Steve BruceGrains

Recent published studies indicate that the USDA is getting more reliable and accurate with September production and supply/demand estimates when compared with the final figures…………..Just another reason that the USDA should be respected and the report on Wednesday approached with respect and caution………………..

When compared with the August figures over the last twenty years the final corn production figures were larger 10 times and smaller 10 times with the variances being 5 million bushels as the smallest and  940 million bushels the highest…the average variance from August to the final is an increase of 305 million bushels………………………With soybeans the final production figure has been larger than the August figure 14 times and smaller 6 times………………The smallest change was 6 million bushels and the largest was 408 million bushels with the average being a 153 million bushel increase……………All wheat production was lighter 7 times and higher 13 times from the August to Final figures…………………..As of September 2017 the September production reports over the previous 20 years revealed that corn production ended, on average 231 million bushels higher  with the smallest change from September to Final at 14 million bushels and the largest 845 million bushels…..Beans averaged a 128 million bushel change with 9 as the least and 408 million bushels the largest…………….It’s a coin flip for corn as the Final exceeded the September 11 times while for beans the Final exceeded the September 13 times……….

Price performance has been negative since the August report and this could be related to improved growing conditions and the belief that we’ve added bushels to the corn and bean crops…………….

Bean and corn harvest, weather permitting, will begin in earnest next week and if the USDA figures are accurate and if the corn and bean crops stay the same as the August figure or increase,  storage space will be snug on farm and off farm…….Typically, this means weaker basis levels  and spreads on the defensive……….

Wheat might be on the defensive with the expectation of increased seeding this Fall given the historical wideness of the corn/wheat spread……..yet, we’ve moved from over $2.00 to under $1.50 in the past month  which might dampen the enthusiasm to add wheat acres in the next few weeks…The recent World Supply/Demand reports have indicated that the stocks to use ratio is historically tight which may spark violent rallies if the southern hemisphere doesn’t perform or if problems occur with seeding in the northern hemisphere……… has been dry in the Black Sea production areas while the US appears to be getting moisture in the small areas of the hard red wheat belt which have been experiencing drought conditions……….

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Steve Bruce

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