Blogging by the Bushel
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Archive for October, 2011

Anna Kaverman – Mercer Landmark

Here’s your fun fact for the day. It is estimated by the U.N, Population Fund that on Oct. 31 there will be 7 billion people on Earth to feed. By 2025 it is projected to reach 8 billion and a whopping 10 billion by 2083. The world’s rate of growth is staggering and it does not appear to be slowing down. As a result demand for food coupled with tight stocks of soybeans and continued concern over the health of the global economy has created unprecedented volatility in the soybean and soybean meal markets.

Though the USDA’s supply and demand estimate earlier this month held no big surprises, prices are going to continue to make leaps and bounds in both directions. Looking at the report first, USDA reduced harvested acreage by 100,000 acres to 73.7 million and lowered its yield estimate from 41.8 bushel per acre to 41.5. The reductions resulted in a 25-million-bushel drop in production to 3.06 billion bushels. And 2011-12 ending stocks fell 5 million bushels below USDA’s September estimate to 160 million.

So why then has the soybean complex been so volatile as of late? The main reason is concern about the overall global economic health. The sheer volume of world money that is in the market creates massive movements whenever there is concern over the global economy. The bottom line is the world economy is driving the market more so than crop fundamentals.

 “The market is very sensitive to the Chinese and the global economies,” notes Matt Roberts, agricultural economist with the Ohio State University. “Over the past few months, the soybean market has really responded to the debt crisis in Europe and changes in U.S. economic prospects.” When economic reports are released that portend slower economic growth, soybean prices soften. “The sensitivity is much more pronounced than it has been, but there is also more global economic uncertainty,” he says.

Where does the bean market go from here? Prices more than likely will continue to trade both sides between now and Thanksgiving based on the economic situation. But as the market turns its attention to 2012 plantings, prices could strengthen. The market will want a lot more corn to be planted and that will create strength in corn prices. Beans will need to defend acres, which will cause strength to come into the soybean market as well.

Anna Kaverman

Mercer Landmark

After the past few USDA reports have been released, one opinion seems to consistently be re-occurring among farmers. That opinion is “Where is the USDA coming up with its numbers?” Many farmers feel that the report numbers at times do not always present the most accurate picture of our current supply and demand situation or in some cases may be skewed or even made up. I myself sometimes have felt this way after a report. That is why I found this blog post on Ag Web particularly fitting especially with the next USDA report due out this coming Wednesday October 12th.  Ag Web editor Greg Vincent recently interviewed the USDA’s NASS Statistics Division Director Joe Prusacki and asked him a few questions. Below is the blog post that was posted back on October 7th. If you have a moment answer the question he poses on Ag Web’s website. I will be sure to let you know what the results say.

What’s USDA’s Report Problem?

Oct 07, 2011

 Following the interview I did earlier this week with USDA’s NASS Statistics Division Director Joe Prusacki, we spent a few minutes discussing the attitude many farmers have after recent USDA reports.

In June, the annual Planting Projections report was scrutinized after floods and poor weather wiped out crops or prevented farmers from planting altogether. The Sept. 30, Grain Stocks surprised just about everyone when corn carryover surpassed the coveted 1 bill. bu. mark. I can guarantee there will be gnashing of the teeth over next week’s monthly Production report.

But Prusacki asked a very good question. “Why is it that people think we miss corn numbers, but they never have a problem with our soybean numbers?” A legitimate question, in my opinion. And I promised him I’d pose the question to the AgWeb community.

So here’s the question. Fill out the survey below, or offer your comments. I’ll post the survey results next week.

USDA Report Opinions

Select the statement that best describes your attitude about USDA reports like the Acreage, Crop Production or Grain Stocks.

 They are as accurate as they can be with the data from farmers and the industry They are inaccurate, but it’s because of the data USDA gets from farmers and industry
They are almost always accurate They’re inaccurate because USDA’s methods are outdated
USDA manipulates the numbers to get what they want  

There seems to be more concern with corn numbers from USDA than any other crop. Why is that?

* Indicates Response Required