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Veteran Advisor

Re: Floor Talk February 13

without knowing what current trends (certainly not any chart trend) USDA used for the report my opinion is a marketeer might be in trouble paying this much mind.

 

...........if they often (within last 4 years) can't project current stocks or reports within a 20-30% margin of error, what value or meaning whatsoever does a 9 yr projection have?Smiley Sad 

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Senior Advisor

Re: Traders

Yes, a prediction is not he same as a projection.  The projection may deal mostly with trends but incorporates other information.

 

A prediction with no basis for it is likely loaded with suppostion.  A projection doesn't necessarily have any supposition, it should be based on quantifieable criteria.

 

No one expect a projection to necessarily end up at a certain point, it only shows a likely conclusion given certain parameters.  But one has little choice but to expect a prediction to eand up at a certain point.  That is what a prediciton is about.  

 

Being skeptical about predictions is good sense.  Using the same reasoning to bash projections is wasting the value of the projection.  

 

USDA doesn't try to predict government policies 8 years out - they'd be the first to say that.  Projection is a useful tool for seeing where things are likely to end up under certain circumstances.  As circumstances change, so will the projection.  Knowing that keeps one from treating it as a prediction or a given.  It makes it a tool for thoughtful people, while a prediciton is a tool for wishful thinkers.

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Frequent Contributor

Re: Traders

Looking back 20 years on a march contract chart, it projects corn will be between $4.50 and $9.00 in march of 2015.  If I only look back 1 year corn will be less than   $1.00

 

By the way what is a    ( 5  c )  not allowed in the post???

 

 

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Senior Advisor

Re: Traders

Not getting into the semantics of "prediction" versus "projection" -- but, as I've said before, it would be nice if USDA would attach some probabilities to their PROJECTIONS -- their PROJECTIONS are certainly based on their knowledge of something, trend or otherwise, which pre-supposes some probability or likelihood of it's (continued) occurrence.

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Senior Advisor

Re: Floor Talk February 13

Which would be a good basis for study to compare USDA projections to eventual actual results, not just a study that compares USDA report stats to analysts' expectations. 

 

For example -- go back to early or mid-2013 USDA projections for ending 2013, and compare to actual results for 2013, repeat same process back in time to see how close they got, on average.  Of course, extreme weather events come into play like in 2012, but not every year.

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Honored Advisor

Re: Floor Talk February 13

Let's look at this from a different angle.    The numbers they put in this thing have never been farmer friendly because their numbers are inflated as to how they will most likely end up. So, why does the USDA put out this prediction at this time of year? Could it be they would like to keep the food prices stablized? Could it be that they want to keep the farm prices subdued? Could it be they want to keep the grain prices down during the crop insurance time? Or, do they simply like to read their own predictions?  Please tell me, what purpose do these predictions have?

Honored Advisor

Re: Floor Talk February 13

Table 17                              
U.S. corn long-term projections                              
                               
Item 2012/13 2013/14 2014/15 2015/16 2016/17 2017/18 2018/19 2019/20 2020/21 2021/22 2022/23 2023/24      
                               
                               
Area (million acres):                              
                               
 Planted acres 97.2 95.3 93.5 91.0 89.0 88.0 88.0 88.0 88.5 88.5 88.5 88.5      
 Harvested acres 87.4 87.2 86.1 83.6 81.6 80.6 80.6 80.6 81.1 81.1 81.1 81.1      
                               
Yield:                              
                               
 Bushels per harvested acre 123.4 160.4 165.6 167.6 169.6 171.6 173.6 175.6 177.6 179.6 181.6 183.6      
                               
Supply and use (million bushels):                              
                               
 Beginning stocks 989 824 1,887 2,607 2,877 2,807 2,612 2,437 2,262 2,167 2,067 1,967      
 Production 10,780 13,989 14,260 14,010 13,840 13,830 13,990 14,155 14,405 14,565 14,730 14,890      
 Imports 162 25 25 25 25 25 25 25 25 25 25 25      
   Supply 11,932 14,837 16,172 16,642 16,742 16,662 16,627 16,617 16,692 16,757 16,822 16,882      
                               
 Feed & residual 4,333 5,200 5,500 5,550 5,575 5,600 5,625 5,675 5,725 5,775 5,850 5,900      
 Food, seed, & industrial 6,044 6,350 6,365 6,415 6,460 6,500 6,565 6,630 6,700 6,765 6,805 6,850      
  Ethanol and by-products 4,648 4,900 4,900 4,925 4,950 4,975 5,025 5,075 5,125 5,175 5,200 5,225      
   Domestic use 10,377 11,550 11,865 11,965 12,035 12,100 12,190 12,305 12,425 12,540 12,655 12,750      
 Exports 731 1,400 1,700 1,800 1,900 1,950 2,000 2,050 2,100 2,150 2,200 2,250      
   Total use 11,108 12,950 13,565 13,765 13,935 14,050 14,190 14,355 14,525 14,690 14,855 15,000      
                               
 Ending stocks 824 1,887 2,607 2,877 2,807 2,612 2,437 2,262 2,167 2,067 1,967 1,882      
 Stocks/use ratio, percent 7.4 14.6 19.2 20.9 20.1 18.6 17.2 15.8 14.9 14.1 13.2 12.5      
                               
Prices (dollars per bushel):                              
                               
 Farm price 6.89 4.50 3.65 3.30 3.35 3.45 3.60 3.75 3.85 3.95 4.10 4.20      
Note: Marketing year beginning September 1 for corn.                              
                               
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Honored Advisor

Re: Floor Talk February 13

That is the garbage in / garbage out worksheet.

 

If we all fall in line and ignore the attempt at market manipulation or the attempt to get next years crop bought at sub $4.50 this winter,

 

And take the guru's in DC as the end all source of knowledge then the presence of this data will prove itself to be false.

 

With our present cost issues and inflexable economics the reality of $3 corn in the next two years will drop acres to the 60 million range -----or ------ inputs like fertilizer will be cut so far the yield would have to drop significantly---------- yet we see as usual, the yield is still going to go up --(monsanto's promise)----------- ignoring the recent history and the water depletion issues that affect most of the irrigation regions.

 

It is nothing more than a manipulation of the market by those who are supposed to guard its integrity.

Senior Advisor

Re: Floor Talk February 13

If your approach to marketing is that the USDA lies on it's reports, then predictions, projections, postulations, perceptions and predilections are all equally good.  Use any word you want and define it any way you wish.  But, just because one or more persons believes in witch doctors, voodoo and potions doesn't mean that the market is going to pay any attention.  Some are actually trying to make money.

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Senior Contributor

Re: Floor Talk February 13

If you truely "believe" cash corn will average $3.30 for the next few years, then maybe you should forward sell for the next few years as well. 

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