The final 2014 crop production numbers delivered by USDA in the January reports leave three issues unresolved.The three problems, as identified by University of Illinois Ag Economist Darrel Good, center on the number of corn and soybean acres planted, the surprisingly small amount of corn used in the first three months of the marketing year, and the surprisingly large number of soybeans consumed in that same time frame.
The first issue is that the difference between the total number of planted acres USDA NASS has reported over time and those officially reported by farmers to FSA has grown. The number of acres planted to wheat, corn, and soybeans as tallied by USDA NASS has steadily grown larger than the number of acres farmers are telling FSA they've sown. USDA has not offered an explanation. The difference in 2014 is nearly 9.3 million acres over the three crops says Darrel Good.
He says the changing relationship between NASS acreage estimates and acreage reported to FSA may make early FSA reports less useful in anticipating NASS final acreage estimates.
The second issue is related to how much corn was used in the months of September, October, and November. Those are the first three months of the marketing year. USDA totals 4.25 billion bushels of disappearance of which feed and residual use accounted for 2.198 billion. This number is a 114 million bushels lower than the usage in the same period last year after it was revised down. The problem says the U of I number cruncher is that over time the range of usage represented in the first quarter figure as compared to total usage for the year has gotten wider.
First quarter use is no longer a reliable forecaster of total marketing year consumption.
It means a lot of uncertainty will persist in the marketplace about how much corn is being fed to livestock.The numbers do get better as time passes during the marketing year. The expectation is the March 31 Grain Stocks report will be more accurate.
The third issue with the January USDA figures is also in the consumption numbers. The implied residual disappearance of soybeans in the first quarter set a record. This might mean the size of the 2014 soybean crop was over estimated. While this is an issue, it will not be resolved for several months. Some insight will be forthcoming from the March Grain Stocks report.
Time will eventually fix all three issues, but it is important to recognize them and the potential changes these may bring to the commodity markets.
Read Darrel Good's Original FarmDocDaily Post