Reuters / Top U.S. agriculture officials Monday were to face questions about quarterly estimates for corn inventories that have frustrated traders and roiled markets for the past two years.
Traders said they would raise their concerns about supply estimates at the U.S. Department of Agriculture’s annual meeting in Chicago for users of agricultural data.
The USDA is widely regarded as the world’s best source of information on U.S. and global crop supplies, offering an unmatched wealth of public data. But over the last two years, several of the agency’s quarterly figures for U.S. corn stocks have fallen outside trade expectations, causing sharp swings in futures on the Chicago Board of Trade.
On Sept. 28, the USDA pegged corn inventories as of Sept. 1 at 988 million bushels based on a survey of farmers and grain elevators. The estimate, which was not supposed to include corn harvested this year, was 11 per cent below the average trade estimate in a Reuters poll.
Analysts were surprised because the USDA, in a separate supply-demand report on Sept. 12, estimated corn inventories left over from previous harvests at 1.181 billion bushels.
The USDA needs to “rectify the issue of why they could be so far off within 15 days of time,” said Mike Zuzolo, president of Global Commodity Analytics & Consulting.
“That’s the pressing issue in the trade’s mind at this point in time,” he said.
The USDA said prior to the quarterly report that it must rely on the co-operation from farmers and grain elevators to report accurate quarterly stocks data.
At last year’s data meeting, the department noted that robust growth in the ethanol sector during the past few years had altered the structure of the U.S. corn market, complicating government efforts to gauge the use of corn for animal feed and to estimate inventories.
This year, USDA alerted traders in the Sept. 12 supply-demand report that early use of newly harvested, or new-crop, corn was expected to displace use of old-crop 2011 corn and to boost inventories of corn left over from previous harvests.
The USDA noted Sept. 12 that nearly 1.2 billion bushels of new-crop corn were available for use before the end of the old-crop 2011-12 marketing year on Sept. 1, up more than 700 million bushels from a year earlier.
Traders and analysts “are going to want more insight into how USDA incorporates early-harvested corn into old-crop feeding,” said Rich Feltes, vice-president of research for RJ O’Brien.