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Senior Advisor

If the USDA willfully distorts reports

Then who is the beneficiary and what would be a government employees motivation for doing that?

 

If i am doing my own yield projections and price predictions, I am really taking a shot in the dark. There would certainly be nothing exact about it nor would I expect it to be.

 

Yet it seem to be a strong notion amongst producers that the evil government is try to screw us over. I don't beleive that there is a concerted effort by government to screw us over. They take the numbers and make an assessment and they report it.

 

Now crops may or may not measure up to predictions, but it is not an exact science. If you know better, explain how it works. Who is doing the dirty to farmers and why?

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Veteran Advisor

Re: If the USDA willfully distorts reports

I don't believe USDA trys to distort anything -- they just do their statistical, albeit time lagging analysis--plug in the numbers, etc.

 

rather -- it is the market advisors/so called gurus and elevator/merchants who distort for financial gain.......why do you think there were postings of merchants lowering their corn basis a week before yesterdays report???

 

****could that perhaps be a scare TACTIC to attempt to relieve weak handed producers from some grain???

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Honored Advisor

Re: If the USDA willfully distorts reports

c-x-1,   Well said.  I would add that the trader's reactions to these USDA predictions are almost always overdone. I am not sure why (with all the information at their fingertips) they put so much weight into these USDA predictions.

I do think that the USDA was created to insure an inexpensive, safe, and steady supply of food to feed the people of the United States. Those employees there are just doing their job.

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Veteran Advisor

Re: If the USDA willfully distorts reports

I would be interested in seeing any of those merchant postings you mention

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Honored Advisor

Re: If the USDA willfully distorts reports

 No distortions or lowering basis stuff, but perhaps this post scared up a few bushels before that $5 level...........
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Senior Advisor
Hobbyfarmer
Posts: 3,179
Registered: ‎01-10-2012
 
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--------------------------------------------------------------    

MARKET COMMENTARY March 27, 2014

 

Raymond Jenkins

 

Corn exports this week were quite strong, with 55.4 million bushels in the 13/14 marketing year. The biggest buyer this week was Egypt (17.1 myn bushels), followed by Mexico, Colombia, South Korea and Japan. The unexpectedly large number was enough to turn corn futures from overnight softness to firmness in the day session. May futures closed at 4.92, but that is still 10 cents off the 5.025 highs set early on the morning of Friday March 7.

 

Now that we have the pump primed, can we fully re-trace that early month move??

 

There is a disease in this industry, and I see it playing out once again today. It is called “round-lot-itis”.

 

It’s where folks get fixated on a particular price point and are willing to forgo pricing any of their grain if they cannot achieve that price level. Yes, that level is $5, and sometimes I am really surprised when folks are willing to let 3 cents stop them from capturing 95%+ of the rally since early January.

 

Raymond Jenkins                Remember, you asked.

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Veteran Advisor

Re: If the USDA willfully distorts reports

Ray, your job is to buy the grain from the producer at the lowest price you can. Nobody should expect unbiased market commentary from you as a source.

 

On a similar note, Bankers have a job to protect their capital that is on loan, and to keep the farmer in hock to the bank to ensure a steady stream of revenue. No farmer should expect a banker to give them sound financial advice, either.

 

Its when farmers fail to realize simple relationships like this that they do not prosper.

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Honored Advisor

Re: If the USDA willfully distorts reports

Well Don, look around the poker table and if you don`t see the mark, then you`re the mark.  This country has a cheap food policy, it`s evident in farm programs, especially crop insurance it encourages everything to get planted.  I`m not saying it`s overall good or bad, but a big supply is good for those buying and bad for those (farmers)selling.  That`s `economics 101` [sic].

 

David Kruse, Jerry Gulke and others much smarter than I have eluded to the fact that the USDA `makes the numbers work` many times.  But surveying elevators and farmers and divining planting intentions and bushels in storage is more of a "art" than science.

 

Look at the Hogs report as reaction to the small cut that PEDV has taken out of the pig numbers, a report like that should`ve been 3 limit down days, but traders "knew better" the real bite out of hog numbers won`t come until summer.   

 

As always just my opinion   Smiley Happy

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Senior Contributor

Re: If the USDA willfully distorts reports

I don't think grain buyers are out to get us. They have more experience in different markets then a farmer who sells a few times a year. We need to become masters at marketing. Make marketing decisions yourself instead of listening to some Joe guy on a farm show on TV who has no skin in the game.

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Senior Advisor

I guess I've seen it all

I've seen an example of everything mentioned above but I'm not so sure about the motivations given as an explanation.

 

As for the USDA, if fingures were skewed purposely, enough to 'keep prices low' then wouldn't it all come out in the wash at times either through market discovery (and I don't mean futures) or huge changes in amounts to square up with reality at times? Then it would be such a credibility gap that private estimates would be independent and show more consistency (which they don't).

 

I have seen a particular column's number in a month played with to an incredibel degree in a report (feed and residual), apparently in order to keep a reasonable ending stock within reality, and then corrected the next month. I don't know what the problem was and didn't get a reasonable explanation for it when I called. There is an ability for the highest supervisors to alter the outcome of raw numbers and I think it's more in the realm of trying to account for what may be a a reasonable method for dealing with occasional radical results from an approximate system of gathering the numbers in the first place. Think M-O-N-E-Y to get a better system that probably wouldn't get wildly better results but WOULD require more requests for informantion from the public.

 

I just recently provided an example of the buy side attempting to 'massage' reality for their own benefit (at least they must think so). But it is an exception and one that sticks out like a sore thumb. On the other hand, the buy side here that doesn't make much of a comment has their own tools at times and it seems obvious that at times they are acting in concert in a very regional market - but even so the producers aren't unaware of their motives even if they do get blindsided from time to time.

 

What it all means is that the PRODUCER is responsible for building a picture by gathering information and marketing based on that. I believe the USDA provides the standard as I believe they have the least immediate desire and benefit from distorting the information. Doesn't mean every report is the be all and end all. And any scenario is to some extent a matter of probability and experience.

 

I have agreed and disagreed with Ray J on market trends. But an opportunity markerter (me) doesn't deal with the daily and weekly and monthly patterns that Ray does to feed a plant that physically consumes grain in large amounts. When it comes to seeing seller's behaviors, especially in his area, I defer to him because he has the experience and contact with people that I (thank God!) don't deal with or HAVE to deal with to make my decisions. And Ray has frequently presented Ideas to sellers to consider ideas that would help them gain an advantage in the future.

 

And so far, I haven't seen anyone in a position to always get the exact number from the crystal ball. That's why I follow trends and ignore some of the daily technical stuff. I would have to change to be a merchandiser or keep a margin on a daily basis.

 

 

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Honored Advisor

Re: I guess I've seen it all

Just my observation Palouser, they (usda) are always "paying it forward" get through spring to make either more corn acres or more bean acres get planted, then "OOOOO the Biiiigggg South American crop is coming OOOOOO!".  All that has to be done is make it until some where in the world a crop is being harvested, then that can be touted.  But in the case of beans, you guys know better than me but if the Chinese take all the beans they have ordered we couldn`t supply them.  Farmers have to be frightened to not hold back any and constant threats of Brazilian beans coming in has to be made.  

 

The USDA is like a great conductor and the producers are the orchestra, the conductor makes sure the the music being played is pleasurable for the audience/endusers.

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