October 30, 2003



Continuous Fall in Projected Soybean Production By USDA An Unbiased Estimation

A series of unexpected cuts in the U.S. Agriculture Department's monthly estimate of U.S. soybean production were within a normal range and do not indicate a deliberate attempt to manipulate the data, a University of Illinois researcher reported yesterday.


The U.S. soybean crop estimate was sharply cut in the USDA's monthly crop production reports published in August, September and October.


The changes in the monthly reports helps to boost grain futures prices at the Chicago Board of Trade to multi-year highs, and aroused suspicion among traders that the USDA may have deliberately inflated crop estimates earlier this year.


Darrel Good, an agricultural economist at the University of Illinois, said his analysis showed the USDA crop estimate reductions were within historical norms for the department's data.


"With the crop turning out much smaller than anybody anticipated, there was a fair amount of criticism that maybe USDA is doing something differently," Good said.


The USDA's National Agricultural Statistics Service each month publishes supply and demand estimates for U.S. corn, cotton, soybeans, wheat and other crops.


Earlier this month, USDA estimated the 2003/04 U.S. soybean crop at 2.468 billion bushels, down from 2.643 billion bushels in September. The August estimate, the first of the fall harvest, was 2.862 billion bushels.


"The September and October soybean forecasts were major market surprises, and the market's price reactions showed this, but they were not unprecedented," the study said.

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