USDA officials defended their quarterly corn stocks and corn production estimates against strong industry criticism at a recent annual USDA data users meeting in Chicago.
Controversy over those recent estimates and concerns the upcoming November crop report might hold another surprise for the corn market resulted in strong attendance at the meeting, with more than 100 people turning out, including producers, grain traders and executives of major grain companies.
Attendees criticized the sharp drop in USDA’s corn production estimate, saying the agency should have identified lower crop yields earlier in the growing season with the crop developing ahead of normal.
Joseph Prusacki, director of statistics for USDA's National Agricultural Statistics Service reiterated that the sharp cut in corn production reflected problems in estimating the average weight of corn kernels. The actual weight came in lower than the estimated weight used in earlier reports, helping to drive the sharp cut.
"Until we get real grain weights, it's very difficult to get a handle on the size of the crop," said Prusacki, who cited the grain-weight issue in an interview last week with Dow Jones Newswires.
Officials also noted that USDA relies on both objective yield surveys and farmer surveys to reach a yield estimate, and said farmers may have been slow to pick up on yield problems with the 2010 crop.
In response to a question, Prusacki said that nearly 91% of USDA's sample corn plots had been harvested ahead of USDA’s Oct. 8 report, a far greater percentage than before earlier reports. That early harvest would seem to diminish the potential for another big surprise in the November crop report.
Attendees also questioned the wide swing in corn stocks indicated by USDA’s June 30 and Sept. 30 Quarterly Grain Stocks Reports.
USDA’s estimate of June 1 corn stocks was nearly 300 million bushels below the average of trade expectations, which helped set off the summer rally in corn prices, but the September 1 stocks number came in about 300 million bushels above the average of trade estimates.
USDA officials said the poor quality of the 2009 corn crop may have played a role in the large stocks swings.
Gerald Bange, who is part of USDA's World Agricultural Outlook Board, said the June estimate may have come in below expectations because much of last year's corn crop was went into storage with unusually high moisture content and naturally shrunk.
For that reason, farmers who reported the size of their crop to USDA based on the volume of their storage bins at harvest may have overestimated the true size of the crop. "That is a potential issue," Prusacki said. "That's a question, that's something we need to look at."
Prusacki rejected speculation from analysts that the big Sept. 1 stocks number reflected commingling of early-harvested grain from the 2010 crop with 2009 stocks. "We asked specifically about old-crop corn, old-crop soybeans from the 2009 crop year, or earlier," he said.
Prusacki also noted the Sept. 30 stocks figure was heavily weighted toward off-farm storage, a factor that he said argued against the idea that new-crop corn had been counted.
Editor’s note: Richard Brock, Corn & Soybean Digest's marketing editor, is president of Brock Associates, a farm market advisory firm, and publisher of The Brock Report.