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Frequent Contributor
ChaseOrstad
Posts: 82
Registered: ‎06-05-2013
0

USDA conspiracy theories

I caught some slack yesterday from producers who refuse to listen to or acknowledge any type of "bearish" outlook. Primarily it is form those out there who want to continue buying into the negative USDA conspiracy theories, and how they are trying to manipulate the numbers in order to allow the Chinese to buy cheap corn....

 

I would rather be right.png

 

 

Seriously??? From my perspective the government would want nothing more than to STOP subsidizing US farmers in any form or fashion, trust me when I tell you lower corn prices will NOT achieve that goal. I also believe the US government is desperately trying to increase consumer spending and US employment. Decreasing agricultural earnings here a home, would once again obviously NOT be the answer. Surely the US government realizes that by the US farmer making more money, spending will increase and more US jobs can be created not only in the agricultural sector but in other areas as well. Bottom-line I do NOT believe in any type of USDA conspiracy theory. Do I always believe their numbers, no, but I think they have an extremely difficult job considering all of the recent changes and growth within the industry.

 

I have long been called one of the biggest bulls in the industry, and I would love nothing more than for US farmers to continue banking big profits. Unfortunately you are NOT paying me to be a "cheerleader," but rather a "scout" or "informant" who keeps you abreast of pitfalls and problem areas that might lie ahead along our annual pricing journey. So trust me when I say there are people in the trade talking about the possibility of a "record yield" this year. In fact some are saying based on the historical USDA yield deviations from this point in time (20.4%) we could be looking at a crop of just under 11.5 billion bushels in the worst case weather scenario, or one higher than 16.0 billion bushels in the absolute best case weather scenario. Do I think that is going to happen? No, but I have also learned that anything is possible. The reality is there are several very respected sources in the trade who believe US yields could fall somewhere between 150 and 170 bushels per acre. If final yields come in at the upper end of this range prices will still be considered too high, at the lower end of this range prices can obviously be debated depending on demand.

 

Moral of the story, great business leaders learn to recognize and overcome their own personal bias and prejudice to make the most informed decisions. The first step is recognizing that everyone has a bias, and it can NOT be suppressed, but rather only managed. For producers that bias is obviously in being "bullish" the market. Why would any farmer have a bearish bias? You might be a pessimist or someone who doesn't like to be disappointed so you natural prepare yourself for the worst scenario... but as someone who grows corn, beans or wheat you are ALWAYS cheering for higher prices. Just like most of those who own a brokerage operation or promote hedging are notoriously more bearish (in an attempt to get more hedging business).

 

Remember it is NOT about trying to be "RIGHT," but rather about banking the most profits with the least amount of risk. Who cares if the yield is actually 135 bushels per acre if the rest of the trade believes it is 165 per acre. You may actually be "RIGHT" in your assessment, but you missed the entire price move. I can't tell you how many folks I have talked to who have missed one of the biggest US stock market bull runs in recent history, but still feel good about it because they believe they are "RIGHT"...what a joke! My suggestion is if you want to work somewhere you get rewarded for making the "right" predictions go work for the carnival guessing peoples weight. But if you want to be a good business owner or in this case "risk manager," you need to be aware of what those with more power and influence are thinking in regards to price.

 

I have never claimed to have all of the answers, but I do have some very good sources of information within the industry and believe I can provide you with a fairly accurate assessment of what is influencing price both long-term and short-term. As a business owner, trust me when I tell you, regardless of how it feels, or if it hurts your feelings, you want the most unbiased information and data you can get your hands on. In other words you want to hear both the good with the bad in order to make the best overall decision for your operation.

 

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Veteran Advisor
BA Deere
Posts: 8,631
Registered: ‎05-13-2010
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Re: USDA conspiracy theories

This is just my thought but "they" think that the price of corn is too high. "They" want end users to have abundant cheap grain, corn could drop in price by half and the gov wouldn't have to kick out anymore subsidy, in essence "let the farmer live off some of his own fat for awhile". When 10% of the voters disposable income goes for food, the wheels are all greased. Cargil and Bunge will make sure China will pay all they should :smileywink:

Don`t redistribute my wealth, redistribute my work ethic.
Senior Contributor
rightone
Posts: 217
Registered: ‎05-13-2010
0

Re: USDA conspiracy theories

A true conspiracy is never proven, AND always unknown too. usda is just some nice folks who work for the govt and help out usa agri using the various govt programs which usa farmers tend to rely on. the epa also does the same thing thru the e mandate etc.. granted govt methods are perhaps somewhat antiquated, but that may be for the best anyway. the sure bet in recent history is the usda PREDICTABLY over estimates crop sizes every year. Sooner or later they may get things closer to real, with luck. They are likely not attuned nor flexible enough to estimate in times of Extreme weather cycles. actually the farther off they are on estimates the better for farmers. just makes things worth more when folks really have no idea what's out there or may be for sale later. Enjoy the inventory secret and price things accordingly. .
Cost affective cattle for every environment here.
Veteran Advisor
jennys_mn
Posts: 1,475
Registered: ‎07-19-2010
0

Re: USDA conspiracy theories

And you should have caught some slack, if you bought into the 14bbl crop to begin with. 14bbl was off the table before we even planted. The was no consideration for the late, wet planting at all, but it was played to the hilt that this is what we got - probably more. Going by useless figures without taking into account what is happening outside of the boardroom door is what I said before - irresponsible. You helped incur major monetary losses to the US farmer by believing a report that was flawed when it hit the street - so much so that even now we still have people thinking there is a 14bbl crop out there. You made your bed - now you get to lie in it.

Jen
Senior Contributor
elcheapo
Posts: 639
Registered: ‎02-11-2013
0

Re: USDA conspiracy theories

I think there to be a problem at USDA. I am
Not 100% sure if an order from upon high
Has come down to "modify" reports, but
Some mighty strange stuff has come out
That is later "adjusted".
It could be a data collection problem or a
New formula being used.
I suspect they have fewer data collectors
(USDA cutbacks)....so an adjustment in
The formula may have taken place.
As for reported numbers.....first it is
Nothing more than what is told to
Them....if the fellow tells a find, how
Do we know.

Yes in some places we will have above
Trend line yeilds...
..
But over all I believe it will be lower, for
A number if reasons.


But the question remains, how to resolve the
Problems at USDA
Senior Contributor
farsider
Posts: 184
Registered: ‎06-28-2010
0

Re: USDA conspiracy theories

Freedom to farm changed how USDA can control crop production in this country. The carrot isn't a payment from usda to get you to plant a certain amount of crop determined by the government. Price is the control now, that is the carrot we understand. Conspiracy, no but an effort to move this boat of a market with an occasional wave of a report could be understandable.
Advisor
WCMO
Posts: 486
Registered: ‎06-30-2010
0

Re: USDA conspiracy theories

[ Edited ]

Starting out with initial projections of max (or record) acres, together with trendline (or higher) yields, provides the market with a bearish price outlook (from USDA) from that point in time until proven otherwise.  Then, condition ratings lag the real siituation in the field due to the time required to observe, report, and verify the information, while condition "appearances" do not accomodate the current situation with wet and/or late plantings and uneven/delayed crop development, nor the current risk of a high percentage of corn pollinating in a narrow window of time.  And, final/real numbers (from USDA) are delayed significantly from when they should be known based on farmer reporting mechanisms (to USDA, and crop insurance, which is also information totally available to USDA).

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"My reading of history convinces me that most bad government results from too much government." - Thomas Jefferson

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Veteran Contributor
Kstater85
Posts: 114
Registered: ‎06-28-2012
0

Re: USDA conspiracy theories

14B bushels was off the table when we planted it ????   Then how come we went to $4.90 CZ ?   Seems like I know who refuses to listen to reason and it is the producers with the tin foil hats crying conspiracy !

Veteran Advisor
jennys_mn
Posts: 1,475
Registered: ‎07-19-2010

Re: USDA conspiracy theories

Yes, 14bbl was off when we planted!!!! Again - and I will say this very slowly - It. Did. Not. Take. Into. Account. The. Very. Wet. Conditions. Or. Lateness. Of. Planting. There, there you have it. That simple. It market was all over our early planting last year, and how big a yield it was going to be - you don't think the reverse is true - you can't have it both ways - Ah early in, big yields - Ah late in, big yields. Apparently you don't remember the justification that we were going to 3.00 last year. Heck, I'm not the smartest person on the world, but I do remember last years bs. Different year, same bs

Jen

Senior Contributor
Farmerjoe79
Posts: 411
Registered: ‎04-02-2012
0

Re: USDA conspiracy theories

Jenny spot on that k stater just likes to blow alot if wind out his azzz.