It was just a few weeks ago when I was patting USDA on the back for having the courage to go ahead and cut corn acres by 3 million and the anticipated corn yield by 10 bushels an acre (bpa) for 2019. Frankly, it was out of character for USDA to step out and make those reasonable adjustments before they had little measurable data available to back them up.
It's no stretch to say most would agree USDA's June World Agricultural Supply and Demand Estimates (WASDE) estimate was better than its May estimate. After all, shouldn't that be one of the basic goals of the reporting process? Sadly, Friday's Acreage report estimates offered no step forward in trying to understand how many corn acres have been planted in 2019.
The only clues we have in Friday's report as to how USDA arrived at its 91.7 million acre (ma) estimate are the breakdowns by state and USDA's Crop Comments. In the state totals, we see Illinois, Indiana, Ohio and Michigan combined for a four-state total of 22.1 ma, down just 50,000 from a year ago.
On June 10, before NASS started adding prevented planting acres into their planting progress totals, corn-planting progress for each of those four states was 73%, 67%, 50% and 63%, respectively. As of June 23, NASS showed those four states with excess topsoil moisture at 57%, 53%, 81% and 63%, respectively. Yet we are supposed to believe that planting finished up just fine?
In the Crop Comments section for corn in Friday's report, NASS explained, "Farmers responding to the survey indicated that 83% of the intended corn acreage had been planted at the time of the interview, significantly lower than the 10-year average."
Farther down in the text, NASS added, "By June 23, producers had planted 96% of the Nation's corn acreage" but they don't explain that their definition of 96% planted started including prevented acres at least as early as June 17. It is as if they confused themselves with their own poor use of the English language -- a planting definition that should have never included prevented acres in the first place.
If NASS truly wanted to provide an honest assessment of corn plantings in 2019, they should have given us the actual survey results of planted corn acres when they acknowledged 17% of acres were still not planted. At least then we would have a much better idea of what a reasonable planting estimate might be for 2019.
Instead, it appears NASS thought it would be a good statistical method to assume that all was well and virtually all of last year's corn acres would be magically planted in a land of soggy fields. I may be guilty of assuming how NASS got to their 91.7 ma estimate, but without further transparency in Friday's report, these are the assumptions I am left to make.
The result is that we saw heavy selling volume in corn on Friday, as clueless noncommercials responded to the higher-than-expected corn planting estimate. The real tragedy is that USDA did the survey work and had an opportunity to educate the market as to what was found, but that information was not released.
Therefore, we are left with a magic number picked from behind a curtain with little explanation as to how it was derived. And now we wait until Aug. 12 for another survey, hoping the next one will have some helpful data and not just fairy-tale assumptions.
For those who have been around the block, I know Friday's disappointing performance from USDA is just one more in a long list of disappointments in ag history. Kind of like finding out your crop got hail last night -- it's another one of those uncontrollable events that adds to life's frustrations.
I am a little relieved to report that DTN Market Strategies (available for subscribers) moved its hedge recommendation to 50% for new-crop corn on June 21 when December corn was near $4.60 a bushel. I'm glad to say DTN's risk-management decisions don't depend on hoping USDA does the right thing.
By the way, the June WASDE report (which got it right) was approved by the Secretary of Agriculture and the Chairman of the World Agricultural Outlook Board, Seth D. Meyer. Maybe they should let him look over NASS' work before the next report comes out -- we could use more of the common sense that the June WASDE report showed.
Friday's blunder is unfortunate for corn prices, and it is frustrating that a real opportunity to narrow the range of corn planting guesses was squandered. In the meantime, the market waits in the dark, having little evidence to lessen the anxiety of uncertain markets.
Todd Hultman can be reached at Todd.Hultman@dtn.com
Follow him on Twitter @ToddHultman
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