Market Matters Blog
Katie Micik DTN Markets Editor

Friday 09/28/12

USDA Goes Against the Grain

When I was handed a copy of the quarterly grain stocks report this morning, I was quite surprised. USDA's corn stocks estimate came in 988 million bushels, well below the average trade estimate, although it's worth noting that some traders thought USDA's estimate would be even lower.

Surprised, several of the reporters in the lock-up room asked for an explanation of why this stocks estimate was lower than the WASDE report early this month. What numbers were they using for feed use or exports? How did they arrive at this lower stocks figure?

The answer we got was that these numbers are based on surveys. USDA goes through two different survey processes to estimate on-farm and off-farm stocks. Then they review those numbers for "reasonableness, consistency with historical estimates and current crop size."

The on-farm stocks survey is a probability survey that includes approximately 66,500 operators, which USDA says comes from a list that gives all farmers a fair shot of being sent a survey. They're asked to provide the total quantity of grain stored on the farm. USDA found that farmers still have 314 million bushels of old crop corn stored on the farm.

USDA's survey for off-farm stocks is a little more precise. The survey is an "enumeration of all known commercial grain storage facilities," which comes out to roughly 8,900 facilities with 10.1 billion bushels of storage capacity. USDA tries to get all facilities to respond, but normally only received reports covering 90% of the storage capacity. Off-farm grain stocks were pegged at 675 million bushels.

Here's what USDA has to say about the reliability of the study from a statistical standpoint, take it how you may.

"Reliability of the on-farm and off-farm stocks must be treated separately because the survey designs for the two surveys are very different. The on-farm stocks estimates are subject to sampling variability because all operations holding on-farm stocks are not included in the sample. This variability, as measured by the relative standard error at the United States level, is approximately 3.9 percent for corn, 9.1 percent for soybeans, and 2.6 percent for all wheat. This means that chances are approximately 95 out of 100 that survey estimates for stocks will be within plus or minus 7.8 percent for corn, 18.2 percent for soybeans, and 5.2 percent for all wheat of the value that could be developed by averaging the estimates produced from all possible samples selected from the same population and surveyed using the same procedures."

Posted at 7:51AM CDT 09/28/12 by Katie Micik
Comments (2)
I know most everyone would like to think there is more corn and beans out there but there just isnt, for instance. Our loacal Elevator usually has a 1.1 million bushel pile besides whats in the bins. This year there is no pile. We also usually fill the 1/2 million bushel Soybean bin. This year it might has 150,000 in it it. There other thing is harvest is all but over around my area. There just isnt any more grain out there. To some it up in simple terms we had less then half a crop. Sorry.
Posted by Thomas Trojan at 7:36AM CDT 10/03/12
Where are you located? That's an astounding difference year over year, especially since we've gotten a few photos in the past few days of soybean piles in North Dakota -- harvest has come on faster than they can get unit trains to ship soybeans out.
Posted by KATIE MICIK at 10:35AM CDT 10/03/12
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