National agricultural statistical agencies in Canada and the United States face challenges in accurately tallying acreage and stocks in times of huge market volatility and difficult weather.
U.S. Department of Agriculture shocked the market last week when it forecast 92.3 million acres of corn, 1.5 million more than the market expected, and put June 1 corn stocks 9.4 million tonnes above what traders expected.
The department says it will resurvey farmers in the northern Plains to find out if heavy June rain dashed farmers’ seeding plans.
Alas, Statistics Canada did not make a similar pledge to resurvey in July to assess the accuracy of its controversial June seeding report.
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As for the USDA stocks number, could high prices in May and early June have caused users to stop buying or switch to feed wheat? We’ll just have to wait until the Sept. 1 stocks report to see if it was correct.
The stocks situation revives memories of 2010, only in reverse.
Last year, the June 1 number was seven million tonnes less than expected, causing a summer prices rally. Then on Sept. 1, those seven million tonnes miraculously reappeared in the stockpile, pushing prices down for a few days until another shocking USDA report that pegged the 2010 corn harvest as smaller than expected. From that point, the price climbed steadily until just a couple of weeks ago.
For the next few weeks at least, the USDA report we have in front of us will be the information that the market trades on.
Worries about the world economy had already driven corn down from its record peak, and the USDA report knocked it down further. The Chicago July contract closed at $5.97 per bushel July 1, a bargain compared to the stratospheric $7.99 it touched in the second week of June.
The lower price and the more comfortable acreage forecast lessen the urgency to ration demand.
The lower price has already prompted China to make a purchase of more than a million tonnes, and others will follow.
Livestock feeders and ethanol makers should be profitable and maintain a steady domestic demand.
And before you know it the Sept. 1 USDA corn stocks report will be out and this time, perhaps, the millions of tonnes of corn that appear June 1 will play a disappearing act.
