USDA GARBAGE ASSUMPTIONS
WEEKLY GRAIN NEWSLETTER
Here are some not so fearless comments for www.dailymarketminute.com
In honor of Mother's Day, I would like to begin this newsletter by extending my heartfelt wishes to my own mother, my wife, and all the incredible mothers out there. Today, we take a moment to express our gratitude and appreciation for the unwavering support provided by these extraordinary women. While we often acknowledge farmers as the backbone of America and the world, it is important to recognize that behind every farmer stands a mother and a wife, offering unparalleled encouragement and understanding. These remarkable women not only contribute to the noble cause of feeding the world but also embody the same level of commitment and devotion to their own families. Therefore, I would like to extend a special thank you to all the mothers and wives who stand beside the pillars of strength, making our world possible.
USDA Report
Friday the USDA gave plenty of information, most of which as Darin Newsom, the former advisor for DTN and present advisor for Barchart, has pointed out for years is simply garbage assumptions. I know every time I assume something both my mother and my wife are quick to remind me what assuming does.
If you look at history, one can easily remember that the USDA has a history of making an “ass” out of themselves. They have also done a good job of scaring farmers into making cheap grain sales, leaving them feeling, while you can assume what I mean.
All kidding and joking aside, the USDA report gave corn and bean bears plenty of new crop carryout to open the door to lower prices. But the reality is that they left the market with a big negative headline news that really doesn’t mean much.
The USDA didn’t update acres nor yields, and made all of these demand assumptions based on production. Which assumes a perfectly well behaved “Mother Nature”. She isn’t like the mom’s and wives I mentioned above. She is rather volatile as shown several times in several areas the past several years.
She can behave and act perfectly, but she is more likely to act like a Katy Perry song, being hot and then cold, yes and then no.
Below is the USDA corn breakdown. If you look under the corn section you will notice yields in 21 of 176.7, followed by a 173.3 this past year, and topping it off is the 181.5 record projection for the crop that;s about ⅔ or so planted.
If you look at the second graph it is from the USDA Report in May of 2012. Notice the trend in yields with 2010 having a 152.8 followed by 5 bu or so less, while the USDA was assuming a record crop of 166. Most remember how that turned out, but for those that don’t it was a yield of 123.4.
I bring this up as it is very typical for the USDA to make assumptions that once in a while, (maybe most of the time) make them look like they have zero clue. They do have some clue, but they also have some motivation to help keep food costs and grain prices down. So naturally they have a bearish skew….
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INCLUDED IN THIS WEEK’S EDITION
Critiquing USDA report for unreliable assumptions.
Highlighting USDA's history of inaccurate assumptions.
Current and historical drought conditions.
Potential impact of drought on grain production and markets.
Decrease in hay stocks and its effect on demand.
Charts indicating potential price rallies based on past years.
Insights from analysts predicting spring low and market rally.
Differences between current year and 2019.
Tighter supply situation based on carryout statistics.
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