Given the delays in planting and maturities and questions around final acreage, it was a stretch for the market to expect the October USDA report to meet our yield reduction expectations. It definitely didn’t happen for corn.
NASS did objective yield measurements where corn was mature. Where it wasn’t, they used the protocol of surveying some 10,000 producers for their yields expectations. Soybeans were more quantifiable, and yield was reduced.
I have a hard time believing this year’s national yield is only 8 bu. less for corn and 4 bu. less for soybeans from 2018.
I expect NASS to continue to lower total production with each monthly report cumulating in January 2020.
NASS will conduct further reviews as the crop matures and weather effects can be quantified.
USDA’s estimate of last year’s ending stocks of 2.45 billion bushels, which artificially depressed prices for at least nine months until corrected in the September stocks report, will not be present this year. Corn ending stocks are already nearly 500 million bushels lower than last year.
So Many Questions
Our lost profit potential would go a long way in improving cash flow. Or to pay for food, college educations, health care and debt retirement. If this were price forecasting by Goldman Sachs
or an equivalent, there would be congressional hearings. Yet a government agency avoids scrutiny.
Price discovery has changed materially. This has given rise to questioning even the CME and the futures industry. Perhaps it is time to question USDA and NASS and their methodology used in forecasting supply and demand. There is also a need to revise delivery points for grains, as basis has varied wildly, causing end users much concern.
Oh, for a return to the days of old when supply and demand was “the” influence in price discovery.
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Jerry Gulke farms in Illinois and North Dakota. He is president of Gulke Group. Disclaimer: There is substantial risk of loss in trading futures or options, and each investor and trader must consider whether this is a suitable investment. There is no guarantee the advice we give will result in profitable trades. Past performance is not indicative of future results.