The Rural Voice, 2019-08, Page 71 At this time of year, market prices
are typically determined by weather
conditions and the development of
the crop in the field. Usually yield
estimates, as driven by weather and
crop development, are anticipated
and the total production of each
commodity can be projected in
conjunction with the planted acreage
estimates. This year this task isn’t
quite so easy. Final planted acres are
still up for debate and the late-
planted crops could face too short of
a growing season if the fall frosts
come too soon. Therefore at this
time, we have an extremely large
amount of uncertainty, both in terms
of planted acres and final yields,
depending on the duration and
conditions of the growing season.
With these variables in mind
where does the market go from here?
Well, short-term the market has
relaxed somewhat from its initial
panicked reaction, to what appears to
be a general acceptance that both
U.S. and world supplies should be
reasonably adequate going forward.
Long-term, as we potentially see
changes in the estimates we
discussed, the market will react
correspondingly. As the facts change
market prices will also change
accordingly.
The USDA has shocked many in
the trade, with their planted acreage
estimates on corn. While everyone
was expecting acreage to fall
substantially from the original
prospective plantings, the USDA
only lowered corn acres a relatively
nominal amount. Everyone knows
about the difficulty that many areas
had getting corn in the ground this
year. The constant rains throughout
the spring pushed planting back
beyond the preventative plant date
for many growers, in many counties,
and everyone knows of somewhere
that corn wasn’t planted. When you
talk to many industry players,
farmers, brokers, traders, etc. you
find that most people do not believe
the USDA’s estimates are accurate.
There is scarcely a report or
commentary out there that does not
suggest that the USDA is off on their
acreage estimates. From this many
wonder why the market hasn’t
reacted as anticipated from this
thought and moved more
aggressively and sustainably to the
upside?
It is interesting to notice that
while it seems everyone is bullish
versus the USDA estimates, the
market has been fading recently,
indicating that someone out there
agrees with their evaluation, for the
time being anyway. Coming from
this discussion it is helpful to
examine the USDA’s methodology
regarding their planted acreage
estimates. Shortly after the report
was released on June 28, I heard an
interview with a lead statistician at
the USDA, who explained their
surveying procedure.
My take-away from the interview
is that their surveying ability is
second to none, recognizing that the
results are only as good as the
information received. For their June
28 report they surveyed farmers as to
their planting intentions between
May 30 and June 17. Keep in mind
that this survey was for planting
intentions, not actual planted acres
and therefore the data demonstrates
intentions that may or may not have
materialized. Therefore, an objection
that one can have is that planting
delays at this late date still prevented
intended acres further. The USDA
recognizes this, and therefore for the
August 12 report they will resurvey
14 leading states.
To gather the initial data for the
June 28 report the USDA completed
two independent surveys. The first
survey was a phone survey. USDA
68 The Rural Voice
Are U.S. planted
corn estimates
accurate… or not?
Scott Krakar is
a Grain
Merchandiser
with LAC Inc.,
Hyde Park,
519-473-9333
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