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Honored Advisor

An alarming question?

Has the USDA done the nation a disservice for not being entirely honest about the nation's grain supplies? And had they not been so bearish with their acreage forecast and projected yield forecast, would the higher price of the grains earlier rationed demand more leaving the nation a larger supply to get through what has the makings of a severe drought in parts of the cornbelt?

Or are they really that incompetent to truly believe their numbers are accurate?  I'm not saying that they are one way or another, but with their reports, it would seem that they are painting themselves into the corner and there will be no way out.  What are your thoughts?

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19 Replies
Veteran Contributor

Re: An alarming question?

In general somebody is to wet, to dry, to something every year.  Many of the "fringe states", (ND, SD) are looking at well above average crop condition scores.  If you look at a state by state crop condition score things are tough in a relatively small area.  I realize if you are in a very dry area it sucks, but overall we are still looking at raising the carryout??  The 147 trend line from last year had 7.5 million replant/prevent plant acres to pull trend line down and now we increase acreage and MANY areas look very good.  The ethanol industry has is slowing and the dollar looks to be on an uptrend which makes me hesitant to get to bullish.  This looks like a selling opportunity?  IMO, no matter what scenario you paint the carryout is gonna go UP with regard to corn?!

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Senior Advisor

I don't know about that

Anyone paying attention had to know several years ago we were in a race with production and demand. How else do explain the huge prosperity in the corn belt while the rest of the country struggles?  I've been of the opinion that the USDA was too optimistic on yield but as far as I know they weren't wrong on acres. This has all been in broad daylight. USDA hasn't fooled us unless we wanted to be.

 

First it was the USDA wanted to destroy the price by predicting so many acres. Now they are hiding the numbers on supply? Is this the USDA you want to get rid of because the private sector or individual farmers can figure it out themselves? Well, where are the other analysts in their figures? They are usually grouped fairly close on either side of the USDA projections. Which means those on one side or the other are more wrong than the USDA.

 

I AM very puzzled by the continuing phenomenal positive basis for corn. I've been puzzled for months. I figured something was going on with supply and from the comments I've gotten about farmer's sales and I didn't think it was due to heavy holding. This has been front and center and PUBLIC KNOWLEDGE. There have been plenty of warnings. If this corn situation is a surprise it's for not paying attention.

 

It's all coming to a head in the next month or so. And it's not even July!

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Senior Contributor

Re: An alarming question?

If we are to assume the USDA is in total belief of their predictions they let out to the public, then yes, imcompetency is rampant within that government agency.

 

~On the other hand, If our gov leadership wants to prevent panic hoarding of all food stuffs, thusly creatings spot grocery store shortages, just demand the USDA make false public crop predictions which will be more than adequate, even surplus, thusly aleviating any panic hoarding.

 

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Veteran Advisor

Re: An alarming question?

Cyclone, understand that the area hardest hit by this years drought are in high production acres. Acres in Eastern Illinois, Indiana and Western Ohio can yield as well or better than acres in Iowa. Grain from these parts of the country may not be available at all this year if the current weather pattern continues. Personally I believe the USDA has been playing a game of chicken, all with a low carryout. A lot of last years replant/prevent plant acres came out of the Eastern cornbelt. Those replant acres out of the ECB yielded very well last year. Its still early enough we could still see a big corn crop this year if things improve weather wise for the Eastern belt, but if it doesn't it wont be like dry years of the past where yields in a high production area of the country are smaller than average...... We may not see combines leave the barn in those areas this year.

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Senior Advisor

Re: An alarming question?

So, how do you explain the private analysts? I don't have any problem trying to understand, question or explain what is going on but this blame game of conspiracies is not logical. It's an easy out for those who don't want to think about real life IMO.

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Senior Advisor

Re: An alarming question?

I'm in agreement. I can understand miscalculation or error but I remain unconvinced of dept of ag willful fraudulant reports.

 

I don't know what would be the motivation and who would gain by it. Sure its a wicked world but bean counters at the USDA?

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Honored Advisor

Re: An alarming question?

Well, some private analysts are kind of lazy, they want to sit on their yacht in Boca and it`s just easier to glean a few things from the USDA.  Also they can be arrogant, they decide in say February if they`re going to be "bullish" or "bearish", they have a 50/50 chance of being right but some are going on 5 years of being wrong.  Twenty years previous, being a analyst was easy, just always be a bear and you were pretty much right "buy a put! buy a put!".  Now when the bear argument of monster crop doesn`t look likely, they go to the old stand by of "ethanol plants shutting down!!" and I`m sure you`ll hear many others by the end of summer.

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Senior Advisor

Re: An alarming question?

And their motivations are?

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Honored Advisor

USDA?

Well Don, USDA comes out with a 166 bushel on 95 mil acres, before nary a seed of corn is sown, that was kind of irresponsible.  The gas had been applied,plowdown, seed pre-paid the farmer was frightened in some cases to sell too cheap, for fear that all 95 mil acres would yield 166 bu. 166 bushel, to achieve that every state would have to break their old yields.  We had a dry winter a dry spring, no charge of soil moisture going into planting, timely rains were a must.  Gulke once said something to the effect that `USDA knows what needs done so they put the numbers out that are needed to make it happen` carrot ahead of the mule.  USDA want`s cheaper corn, because endusers are the ones that will juice the economy, us dumb farmers will just buy $14,000 land with our $7 cash corn.   Like low interest rates, they are low because the fed doesn`t want you to put money in the bank, they want you to chase high returns in the stock market, that will help the economy or so they think.

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