Provided by South Dakota State University Extension
The recent government shutdown resulted in a lack of fundamental information on supply and demand factors that market participants rely upon to make marketing decisions. This has been highlighted most recently by the USDA announcement that they would not release the October World Agricultural Supply and Demand Estimates (WASDE) Report that was scheduled for release on Friday, Oct. 11, explained Lisa Elliott SDSU Extension Commodity Marketing Specialist.
Elliott said the October WASDE is important because it is a vital report that market participants rely on to gauge potential production of corn and soybeans. It incorporates the National Agricultural Statistics Service (NASS) objective yield results as of Oct.1.
Leading up to the report, NASS enumerators collect mature or nearly mature samples of corn and soybeans, dry down the samples and weigh them to estimate yield. The estimated weights are incorporated into a statistical model to predict yields based on historical sample data at similar maturity levels.
"Even though the government reopened prior to Nov.1 allowing for samples to be taken for the November objective yield survey, critical information will be lost because of the large number of sample plots that have already been harvested," Elliott said.
She explained that by November, these missing corn and soybean plot yields will utilize the Sept. yield results for those plots where generally number of ears, ear length, ear girth and number of pods per acre were the variables mostly used for estimating yield.
"These variables that indicate yield may not have the accuracy that can be obtained by actually harvesting a small sample of the plot, drying it down to the accepted delivery moisture, and weighing the sample in a lab," she said.
For a more accurate look at production, market participants may need to wait for the January WASDE report, when producer production survey results may adjust production estimates. Meanwhile, Elliott said more market participants will rely on private firms who estimate yield figures too.
"Generally the results by the USDA-NASS from the objective yield survey are given greater weight for indicating actual yield than alternative methods used by private firms or even NASS producer surveys where improper sampling, reporting error, etc. can cause biased or inconsistent results," she said.
The October WASDE report would also show how the USDA reconciled the fewer planted acres reported in the September Farm Service Agency (FSA) survey.
"Market participants expect, on average, that both corn and soybean harvested acres to be decreased from the September WASDE report; however, market participant estimates vary greatly," Elliott said (see Table 1).
Some variation may be due to how market analysts view the percentage of planted acres to be harvested Elliott explained, but there also could be differences in knowing how USDA will incorporate the FSA data to adjust their current planted acre estimates which are derived from the June Acreage survey.
"There is a difference of 1.9 million acres for projected soybean harvested acres between market participant high and low estimates. The difference for corn was 2.2 million acres for projected corn harvested acres between the high and low estimates," she said.