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Honored Advisor

USDA and Informa

USDA predicting a corn crop of 14.5 billion bushels

Informa predicting a corn crop of 14.7 billion bushels

 

Looks like we're gonna have to build a few more grain bins.

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12 Replies
Advisor

Re: USDA and Informa

Larry, Moe, and Curley at USDA and Misinforma are notorious for fantasyland estimates, and again they did not disappoint.  Adios Amigo. John

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Veteran Advisor

Re: USDA and Informa

Faust, roarin',

 

maybe, just maybe we got the wrong job. Think about it.... them geniuses get paid a full time salary for coming up with those (several digit #'s)--let me count...11 figures. Does that sound right? yeah, i'm sure they have other "WORK"Smiley Winkto do, as well......but they are sittin' in the cat bird seat gentlemen, chucklin' away, planning their next fishin' or huntin' outing, smokin cigars, sippin' single malt scotch...Hmmmmmm

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Senior Advisor

Prediction vs. Projection

Nobody is predicing anything.  Are you guys doing this to yourselves on purpose or are you participating in some big fraud?  Surely, you're smart enough to know that a projection is not a prediction.  I just can't get over it.  

 

Projection:  an estimate of future possibilities based on a current trend.  In other words, if things stay the same, here is where they will end up.  It looks backward for the basis of its figures..

Prediction:  prophesy, foretelling, in other words, To state, tell about, or make known in advance, especially on the basis of special knowledge.  It looks ahead and may or may not have anything solid to base it on..

 

The USDA is saying, "hey, if things stay the same, here is where it will end up", like, if this road continues straight here is where it will go.  

You are restating this and changing it to be, "the USDA is saying this is going to happen in the future."  in other words, "this road will be straight so here is where it will go".   USDA is not and has not and probably never will say that.

 

The first reason this matters is so that we get the emotion out of USDA projections and use them as a tool rather than as a scapegoat for our own marekting mistakes.  You can bet that Cargill and ADM and Continental and you name it is going to take USDA projections and factor them into their hedging plans.  They will include a lot of other pattern analysis, like seasonals, weather, customer behavior and so forth and will add to that fundamental, technical and cyclical information to arrive at their hedging plan.  Without knowing from personal experience, I assume that Cargill and ADM don't spend any time at all entertaining any emotion about a USDA projection.  They crank it into the planning hopper and see what comes out.

 

When we get emotional about something that we don't even understand, we emasculate our markeintg planning capability.

 

 

Veteran Advisor

Re: Prediction vs. Projection

maybe they're having fun--mocking, because they feel their first yearly projection is always a mockery, or otherwise meaningless in and of itself. ie. appears to consider very little of what is occuring in the real world of many variables.

 

B/C The market usually trades off USDA #'s, this can cause confusion for some...didn't a lot of farmers lose quite a bit of money from these projections last year?

 

perhaps the USDA needs to have more of a disclaimer (better explanation of what it's proj is based on. ie. what their definition of current trend is, or "things" staying the same, etc.) that goes along with their initial estimate....esp for the otherwise less informed farmers?

Senior Advisor

Re: Prediction vs. Projection

Amen. I know some who have worked in this capacity and they are people you WANT to stay in contact with. They are serious people doing a serious job.

 

They may get a good salary because of their skills but I don't believe thier hobbies are subsidized.

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Honored Advisor

Re: Prediction vs. Projection

This wouldn't be such a big deal if the traders didn't trade off of this information.  Projections on things staying the same would mean many,many less bushels......Take a look at the drought map.     A projection with the drought map in mind would have a much more accurate ending number.  A projection of USDA's magnitude means that the drought is over and everything is normal.  Would anyone out there where the dirt is dry take a normal year?  You bet they would.  Do I think they are gonna get a normal year? I have no idea........and neither does the USDA.

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Veteran Contributor

Re: Prediction vs. Projection

Thank you Jim!  Well said!  If guys spent as much time on marketing strategy as they do getting their panties in a wad and pissing and moaning about what they THINK the USDA is trying to say, they would be a lot better off.

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Veteran Advisor

Re: Prediction vs. Projection

JIm, I have to respectfully disagree.  Last spring's USDA prediction of a national yield of 163 was delusional.  Not saying it could not have happened, but the odds had to be in the 3% or less range. 

I don't get excited with the numbers anymore for the USDA, informa, or anyone else.  I am responsible for my marketing.  If I chose to agree or disagree with their numbers it is my cash on the line and I can handle that.  Their reports have costs some guys some serious cash, but that probably helps me in the long run.  The more farmers sell early and often is always good for those of us that sell late.

Just like the spin we all listened to last year.  Early planting would fill the pipeline earlier enough to take keep the lid on the market.  Didn't work out that way.  Yet, I don't hear the same spin this year worried about if we get late planting, how do we fill the Sept. pipeline.  Tell me what the weather is going to be like in July and Aug, and you will give me some information that is worth something.  The rest is just worthless chatter.

If we are pricing corn and beans in gold they are so cheap compared to 2008.   If you want to protect your crop insurance revenue, kinda of risky to sell ahead, we are 50cents plus under crop insurance price on corn.  Could be a winner, or the biggest loser.  Toss the dice at this stage of the game.

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Senior Advisor

Re: Prediction vs. Projection

Although projections are interesting to read, name one person other than speculators that are benefited from them?
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