October 29, 2008


Corrected USDA crop report may focus on yields, soy seedings



Word that the US Department of Agriculture is preparing to publish a "corrected" version of its Oct. 10 crop production report has triggered speculation that the agency may be preparing to revise its official estimate of domestic corn / soy yields, or once again adjust its already controversial estimate of US soy seedings.


The agency announced late Monday that the needed correction - and an "abbreviated" global grain supply/demand report made necessary by the corrected US figures - will both be released this week by its National Agricultural Statistics Service.


"This afternoon's announcement of crop production changes by NASS is unprecedented," said Benson Quinn Commodities analyst Kim Rugel. "The announcement did not specify what changes were made, leaving speculation to run rampant."


Much of that speculation centres on the possibility that the USDA will make further revisions in its estimate of US soy acreage.


"We must remember that the biggest question regarding the October 10 report was the huge 2.2 million acre increase in soy acreage that appeared in the data," said market consultant Rich Balvanz of AMS Commodities.


"It came on the heels of an unexpected 1.1 million acre increase in 2007 soy acreage that appeared in the Sept. 30 quarterly stocks report. It seems possible that the revisions might in some way be linked to recent adjustments in soy acreage."


Rugel said statements made by USDA economists in the original October 10 crop report indicated that the agency was having difficulty enumerating exactly how much land US farmers may have seeded to soy during this year's unusually rainy spring.


"The USDA stated in the October crop production report that planted-area was updated based on administrative data, as paperwork slowly flowed through the system," Rugel said. "With the late start to spring planting and (record) high June prices - did farmers find a few more pastures and potholes to plant?"


Other insiders suggest that the USDA may wish to use the corrected crop report as a vehicle for adjusting soy and corn yields stated on its official supply/demand balance sheet; yields which anecdotal evidence suggests may be diverging widely.


"(I am) still hearing than expected on soy yields and 10-20 bushels per acre more than I thought from a vast array of corn producers," said Iowa commodity trade consultant Karl Setzer.


The USDA's original Oct. 10 crop report pegged national average yields at 154 bushels per acre for corn and 39.5 bushels per acre for soy. Season-average cash market prices were forecast within a range of US$4.20-US$5.20 for corn and US$9.60-US$11.10 for soy.


"The consensus in the trade believes the adjustments will be made to the bean crop, but the USDA could also raise corn production, after picking up on better-than-expected yields in the early harvested corn fields," concluded Benson Quinn Commodities analyst Kevin Kjorsvik.