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USDA challenged on March data
Nearly three weeks after the USDA released data that sent the corn market plunging, the discussion surrounding that Quarterly Stocks Report continues.
This time, the debate as to how the USDA found more corn stocks than the trade expected involves the USDA itself. On Thursday, the MDA Weather Services company invited USDA to discuss the March Report with market analysts and conference attendees.
It's important to understand that in its report, the USDA pegged the U.S. corn stocks, as of March 1, at 5.40 billion bushels, compared to the average analyst estimate of 5.030 billion bushels.
The report was big because the market had this scenario of old-crop corn tightness that it didn't know how to handle, strong cash markets, and livestock operators fearful of running out of feed supplies.
At the same time, record-large production was expected to show up in the report, giving the bulls little to chew on. Ultimately, the report revealed the large 2013 acreage prospects along with the very surprising building corn stocks.
Dan Basse, AgResource Company analyst, says the market is still scratching its head over why the government's estimates have been so variable vs. the industry's estimates, in the past three years.
"Are the rules of the game changing," Basse asks. "
Joe Prusacki, USDA NASS Director, says the controversy surrounds where the corn stocks are stored. The answer is off-farm, not on-farm. For the first time in the March Report, off-farm stocks were higher than on-farm stocks, Prusacki says.
The USDA representative says the government's data collecting procedures have not changed.
For the March Report, the USDA receives an 89% survey response rate from off-farm facilities, while farmers (on-farm) respond at a 75% rate, Prusacki reported.
SOYBEANS EASIER TO TRACK
Because corn is used in various ways i.e. feed, ethanol, food, exports, the USDA is faced with challenges in collecting its data. "Plus, we have no way of collecting the data of corn that may be in-transit. Nobody does a feed survey. So, the 'feed-and-residual' part of the balance sheet really represents residual. Also, we rely on farmers and 'commercials' to tell us what they have in stock. One thing we are doing is tapping into test weight results," Prusacki says.
This test-weight data should help the USDA become more accurate with the amount of corn on-hand, he says.
For soybeans, the USDA March Stocks Report were less controversial. For stocks, as of March 1, USDA estimates 1.00 million bushels, compared to the average analysts estimate of 947 million bushels.
"Soybeans are either crushed or exported. There is a tiny amount that goes towards seed or on-farm use," Prusacki says. "Soybeans are substantially easier to track through the system."