The U of Illinois evaluation looks very familiar
Jan 17, 2014
Hello Pro Farmer Members!
No 'smoking gun' was revealed in University of Illinois' evaluation of USDA reports. That'll leave more than a few people disappointed. I'll admit, I haven't read the full 140-page report, I've just gone through the 5-page summary that includes suggestions on how USDA can essentially rebuild confidence in their estimates, and the grain stocks data in particular.
Several of the suggestions are designed to bring more clarity to domestic corn use. Specifically, break the feed & residual corn-use estimate into a feed estimate and a residual estimate and to survey ethanol plants for actual corn use instead of implied corn use based on a bushel-to-gallon conversion rate.
(Editor's note... I stopped writing about 2 1/2 hours ago and went back and started reading "old" Pro Farmer newsletters in which we've discussed some of the issues with the Grain Stocks Reports. Which leads me to...)
I appreciate all the work and the University of Illinois... they do some really good work. But, there's not much new in their evaluation of the grain stocks reports. We've talked about and cussed and discussed the issues many times over the past three years. One issue that didn't get much attention in the U of IL evaluation is the harvesting of new-crop corn ahead of Sept. 1 and making new-crop corn available for use in the old-crop marketing year.
I'm not saying the new-crop bushels harvested in the old-crop year are counted as old-crop stocks. What I am saying is the use of new-crop corn in the old-crop marketing year leaves old-crop bushels sitting in the bin on Sept. 1. It's the displacement of old-crop corn use that helps to push Sept. 1 stocks higher than expected. We'll... at least that one possibility.
Also, the U of IL evaluation did very little to discuss where market expectations come from. Yes, the expectations ahead of the Grain Stocks Report is the average pre-report trade guess. That guess, however, is based on the most recent carryover estimate in the Supply & Demand Report from USDA. We've argued in past issues of Pro Farmer that maybe the problem isn't with the NASS survey of grain stocks, but it's with the WAOB's carryover estimate in the September S&D Report.
Of course, that carryover estimate in the September S&D Report is at least partially based on the stocks of corn NASS said were in place on June 1.
I was also disappointed that the U of IL didn't identify what I think would be a fairly effective way of removing some of the mud from the waters on this issue. Why not move the marketing year on corn to August-July? With more corn planted in the South and higher-yielding shorter-season corn varieties adding to the available supply of corn before Sept. 1, an Aug-July marketing year for corn would make it much easier to draw a hard line between the old- and new-crop corn supply.
That's it for now...
... I just ordered a chicken and an egg from Amazon... I'll keep you posted.
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