Fundamentally Speaking
Joel Karlin DTN Contributing Analyst

Thursday 01/30/14

USDA Production Changes From Feb Outlook Sessions to Final Figures

Next month the trade will be looking forward to the USDA’s first tentative 2014-15 balance sheet projections for corn, soybeans, and wheat at their annual agricultural outlook conference.

Based on computer projections including assumptions of normal weather or other supply or demand shocks, production estimates are included based on projections of planted and harvested acreage and trend yields.

This is a daunting task given that it is almost 11 months after these prognostications are made that the final production figures are released.

This graphic shows the percent that the final figure has deviated from the Feb Ag Outlook figure for corn, soybeans, and wheat from 1998 to 2013.

As expected, the largest deviations occur when there is unusually good or bad weather such as the bumper corn crop year in 2004 or the disastrous drought reduced corn crop in 2012.

On average, the USDA tends to overestimate corn and soybean production by 2.1% and underestimate wheat output by 1.0%.

It may appear that the USDA has a better handle on wheat production estimates than either corn or wheat but a look at the standard deviations of the annual percent differences shows the greatest variability for wheat with a 9.6% standard deviation vs. 8.5% for corn and 6.2% for wheat.

(KA)

Posted at 8:18AM CST 01/30/14
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