Floor Talk February 13

[c-x-1]

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? 

[Jim Meade / Iowa City]

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.

[HMVE]

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???

[WCMO]

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.

[WCMO]

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.

[roarintiger1]

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?

[sw363535]

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.

[sw363535]

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.

[Jim Meade / Iowa City]

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.

[Slim123]

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.