Corn Stocks: Not a Correction, Not New-Crop

15:19PM Sep 30, 2010

Following the Sept. 30 Grain Stocks report, the market buzzed with conjectures such as: Was USDA correcting a mistake made in its June report? Did USDA collect data from ethanol plants in September but not in June? Do the stocks include early-harvested new-crop bushels? AgWeb went direct to USDA to find the answers. They are all NO. 

“First, what I find odd is that we use the same survey instrument to collect the information for corn and soybeans, yet no one seems to question the bean numbers,” says Joseph Prusacki, director of the statistics division at the National Agricultural Statistics Service. “How can one be okay and not the other?”
Furthermore he says, NASS does not “correct” past reports; the numbers are what they are. NASS surveys farmers and commercial enterprises such as elevators and ethanol plants and reports the results. “Of the 1.707 billion bushels of corn stocks in the September report, just 45 million were on farms. The remainder was in the hands of commercials,” he says. “Would you not expect those people would have a very good handle on their inventory?”
In addition, the list of commercial companies surveyed is very stable from one quarter to the next, and the farmers responding have a 50% to 75% overlap, so their responses should be consistent from one quarter to the next.
“If our statisticians notice a farm with stocks higher in September than in June, we re-contact them and ask if there’s a mistake,” says Prusacki. “In some cases there is. In others there’s a reason, such as they are also a livestock feeder and bought corn because they saw prices going up.”
The NASS surveys for both farmers and commercials specify: “Old-crop on hand (from 2009 and earlier years).” So the 300 million more bushels than the trade expected should not be new-crop, although Luke Chandler, economist with Rabobank in London, notes:
“There is little to no regulation/supervision of reporting, meaning the potential for discrepancy is actually quite high.” If one accepts that commercials keep good track of their inventory, this would imply they are purposely misreporting.
When all is said and done, a discrepancy of 300 million bushels out of a 13-billion-bushel crop is about 2% that can’t be accounted for. “Where was that 300 million bushels back in June?” asks Prusacki. “Were farmers perhaps moving inventory and it was in transit? We don’t know. We can only report the numbers we collect.”
Watch the October issue of Top Producer for more information on how USDA collects its data and prepares its reports.