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Jim Meade / Iowa City
Senior Advisor

USDA Corn Stocks Explanation

Three Illinois crop economists analyzed recent surprises in corn stocks estimates to see if there was an explanation.  We've seen many such explanatinos on this forum, incluidng mixing old and new crops, poor estimation of ethanol use, failing to account for test weight, different reports from new corn growing regions, more on-farm storage, changing the survey population, lower survey respons rate, and more corn in transit.  These and more explanations are considered and dismissed in this paper.  You can read the explanation for the results in each case if you're interested.

 

http://farmdocdaily.illinois.edu/2014/02/explanations-for-recent-surprise-USDA-corn-stocks-estimates...

 

One explanation seems to hold water and will be discussed more in future papers, the authors say.  It is:

 

"There has been no shortage of explanations offered to explain the decline in the ability of market participants to anticipate USDA stock estimates for corn in recent years. We examined some commonly proposed explanations and found each of them to be lacking in terms of one or more of four key criteria. So, does this mean the grain stocks surprises simply cannot be explained? We don't believe this is the case. Instead, there is one explanation--unresolved sampling errors in production estimates--that has considerable merit. More specifically, large market surprises may be related to large sampling errors for January production estimates. The next two posts in this series will present the case for this explanation."

Issued by Scott Irwin
Department of Agricultural and Consumer Economics
University of Illinois

Dwight Sanders
Department of Agribusiness Economics
Southern Illinois University

Darrel Good
Department of Agricultural and Consumer Economics
University of Illinois

 

It looks to me like the guys doing the sampling are being inconsistent and inaccurate.

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3 Replies
Hobbyfarmer
Honored Advisor

Re: USDA Corn Stocks Explanation

Warn me next time you put one of these things up....

 

Sampling errors in the Jan report?

 

Harvest is statistically complete before
Christmas.

 

Explanation ...

 

NOPE...

 

EXCUSE I could buy, BIG difference, even if it is just semantics

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sw363535
Honored Advisor

Re: USDA Corn Stocks Explanation

January sampling, ????

 

Could this be refering to what they might have sampled from those surveys sent out??

 

 

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WCMO
Senior Advisor

Re: USDA Corn Stocks Explanation

Admittedly, I remain a bit of a skeptic. 

 

Read the doctors' report -- didn't say there wasn't a cancer, just didn't see any.

 

If the oil companies fund a study that says ethanol isn't a suitable (partial) replacement for gasoline, are you skeptical?

 

If the gas companies fund a study that says fracking is 100% safe, are you skeptical?

 

If the pharma companies fund a study that says their new drugs are 100% safe, are you skeptical?

 

If the USDA funds a study about the accuracy of USDA reports, ???  Just sayin', but not sure who else would have stepped up to fund the study.

 

Actually, I read the report, plan to read it some more, and give the authors a lot of respect and credibility.  They had some decent explanations in some areas, pointed out weaknesses in others, etc.  While overall statistics might say the USDA' s differences are not significant, that's like saying that overall it's been a cold winter.  I think we had a few relatively warm days in there somewhere, and I think there have been specific months/reports where USDA's differences were significantly surprising.  USDA has a big job to do, and one that they try to do well (I guess), not that they can't do it better.  IMO, relative to the information already out (public and private), and multiple private entities digesting and summarizing that information, there should never be a big surprise in any USDA reports -- when there is a big surprise, something is amiss (either in the development of the report itself, or in one or more of the mechanisms generating information leading up to the report).

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