October 19, 2011

USDA to eliminate report regarding collapse of American grain

USDA faced doubts over its crop estimates and is going to axe a report that may provide information on the collapse of US grain use for feed.

The department revealed that it is to axe 10 reports, and reduce the frequency of a further four, to save cash in the face of proposals by US Congress to cut 5% from the domestic National Agricultural Statistics Service division.

The briefings facing elimination include a much-watched July report on US cattle numbers and a little-known survey on "Distiller Co-Products for Feed" - a topic which USDA officials admitted that an annual grilling by investors, could help explain data showing a controversial jump in corn stocks estimates.

The inventory forecasts has crystallised concerns over the USDA's recent record of crop forecasts.

A 208 million bushel upgrade two weeks to the USDA's estimate of US corn stocks, which sent Chicago futures down the exchange limit, could be down at least in part to distiller's grains, a byproduct of ethanol production, being used in place of the grain, the meeting heard.

"It may be related to the fact that we are using 40% of the US corn crop for ethanol," Gerald Bange, head of the USDA's World Agricultural Outlook Board, told traders.

However, the USDA acknowledged a lack of knowledge on the sector, including a lack of a reliable data source on conversion rates of corn to ethanol, which would improve insight into distiller's grains output.

A report from Paragon Economics and Steiner Consulting on Tuesday highlighted that output of distillers grains "is an item we do not know for certain at present". The groups added that they were "not completely sure" what the Distiller Co-Products for Feed survey was, "since we can find nothing about it on the NASS website".