Fundamentally Speaking

In a prior post we looked at the USDA's track record in estimating Argentine and Brazilian soybean production from their first WASDE estimate to the one a year later.

In this piece we have done the same thing for the USDA's projection of South American corn production, specifically output from Argentina and Brazil from the 2000/01 to 2015/16 marketing seasons.

We measure production using data from the WASDE report which is the USDA's monthly world agricultural supply-demand estimates from their initial estimate of global corn production to their estimate for the same marketing year twelve months later.

The first WASDE estimate for the upcoming year is issued in May though the USDA did not start estimating Brazil's corn production till the 2001/02 season.

This graphic shows some large deviations that were no doubt associated with particularly good or bad weather conditions in that growing season along with uncertainty as to how many acres would be seeded, more so for Argentina than Brazil.

Over the past 15 years the USDA has understated the final Argentine soybean crop by as much as 40% back in the 2009/10 season while overstating final output by 44.7% in 2008/09.

The range is smaller for Brazil with an understatement of 22.7% in 2006/07 and the USDA overestimating the crop by 13.7% in 2004/05.

The average over the past 15 years has been for the USDA to overstate the Argentine crop by 0.8% and understate the Brazilian crop by 4.3%.

(KA)