Statistics Canada, USDA must improve accuracy

A growing crop is a moving target that is hard to accurately measure.

We reported last week that Statistics Canada’s July crop estimate, which is released in August, has under-reported the size of the canola crop compared to the final assessment in eight of the past nine years.

Analyst Larry Weber had noted this discrepancy. There is a wide range of the shortfalls, but the average of the eight under-reported instances is 1.7 million tonnes.

This situation adds to the calls for improvements to the process, such as enhancing the July farmer survey with in-field crop measurements and satellite monitoring.

Statistics Canada and Agriculture Canada are co-operating to incorporate greater use of the Crop Condition Assessment Program satellite imaging system. They released the first full report on crop size using the CCAP last week.

However, it’s not surprising that the farmer survey conducted in July could generate cautious yield forecasts from producers who each day during the growing season are beset with weather challenges, insects and crop disease.

Analysts often say Statistics Canada could learn things from the United States Department of Agriculture’s supply and demand assessment process. The USDA’s system is impressive on paper, but it too can have problems.

Statistics Canada’s low estimate of canola inadvertently benefits farmers because it supports canola prices, but a USDA shortcoming depresses oilseed prices.

Todd Hultman of DTN notes that a comparison of the March monthly supply and demand report to the final year end report found that the USDA has over-estimated year-end soybean stocks in the March report in 12 of the past 13 years.

For example, in March 2014, five months before the end of 2013-14 crop year, the USDA forecast soybean ending stocks at 3.94 million tonnes. The final estimate was a record low 2.5 million tonnes.

It was out by a wider margin this year when in March it forecast 2014-15 ending stocks at 10.48 million tonnes. The most recent tally was a much tighter 5.71 million tonnes.

The USDA consistently under-estimates soybean demand, which leads to the over-stated stocks estimates. That hurts soybean prices, which in turn has a big influence on canola prices.

In Canada, the federal agriculture department forecasts canola demand, and it is usually pretty close to the mark. However, year-end stocks see big adjustments because the original estimate of supply is under-estimated.

Measuring the size and demand of huge crops is a daunting task, and while improvement is always possible, the reporting bodies apply dedication, skill and professionalism to the task.

We await greater accuracy, but in the meantime, from a farmer’s point of view, Statistics Canada’s crop under-estimates are preferable to the USDA’s demand estimate shortfalls.

Contact darce.mcmillan@producer.com

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