Grain traders were expected to pepper U.S. Department of Agriculture officials with questions on Monday this week about how they came up with surprising crop data that has prompted wild swings in futures prices.
USDA is widely regarded as the world s best source of information on U.S. and global crop supplies. But over the last two years, several of the agency s quarterly figures for U.S. corn stocks have fallen well outside of trade expectations, causing volatile swings in futures.
CBOT corn prices plunged 6.3 per cent on Sept. 30 their second-biggest drop of the year after USDA reported U.S. Sept. 1 corn stocks at more than 1.1 billion bushels, topping the range of trade estimates as well as average trade forecast of 964 million.
Three months earlier, the June figure for corn stocks also came in above the range of trade expectations, triggering an even bigger sell-off in CBOT corn. The estimates of U.S. crop yield, production and ending stocks have also at times come under fire from traders hit by whipsawing markets.
USDA officials were expected to take questions Monday at the annual meeting in Chicago.
There is extreme frustration in the grain community, said Rich Nelson with Allendale Inc., a commodity research firm in McHenry, Illinois. Guys are going to ask about the grain stocks report: How can feed use be so low?
USDA s Sept. 1 stocks figures implied lower feeding rates for corn during the summer quarter compared to a year earlier, despite higher numbers of livestock on feed. Some analysts said the figures strained credulity.
Implied feed and residual use of corn during the final quarter of the marketing year was unreasonably small, University of Illinois agricultural economist Darrel Good said in a research note.
The estimate of large Sept. 1 stocks also appears at odds with the ongoing, very strong corn basis, Good wrote.
A year ago, USDA s September stocks report made a similar splash, with the corn figure coming in well above trade expectations. Some attributed that discrepancy to an early 2010 harvest that may have blended new-crop supplies in with old-crop stocks, bolstering stocks, although NASS officials disputed that theory.
This year, the U.S. corn harvest was barely underway by Sept. 1, leaving analysts scratching their heads as to how USDA could have come up with such a big stocks figure.