We again note that USDA is forecasting both record U.S. corn production and total usage for the coming year.
The attached graphic sheds some light as to how often USDA has done this over the past 25 years and how USDA prognostications of record output and consumption have worked out.
We begin by noting that USDA's first production estimate given in the May WASDE since 1995 has averaged 1.1% below the final output figure and its final usage estimate has averaged 0.5% below the actual consumption figure.
The biggest downside misses for both production and total demand occur in years of crop shortfalls such as 1995, 2002, 2012 and even last year, as lower output is generally associated with high prices that tends to suppress demand.
Conversely, the largest upside misses occur with big crops as they lower values that tends to stimulate usage.
Since the 1994/95 season, USDA has predicted the coming year's corn crop will be a record including this year, and in six of those nine other years that proved true.
On the other hand, USDA is often more likely to forecast demand at record levels, having done so 17 times including this year, yet only eight of those times has this occurred.
The bottom-line is that since the 1994/95 season, USDA has forecasted both demand and production to be record high eight times and of those five times they were correct on both.
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