Ten Things You Should Know About the USDA’s Corn Harvest “Resurvey”
The USDA’s January Crop Production report represents the government’s final yield, harvested acres and production figures for corn and soybeans. Given the delayed corn harvest this year, the USDA stated in the January Crop Production report that they will be “recontacting” corn producers in North and South Dakota, Wisconsin, Minnesota and Michigan to help develop a more comprehensive final assessment of 2019/20 corn production. After talking with the head corn analyst at USDA-NASS, FBN has a working understanding of how the government will proceed with their resurvey along with an idea about when the data will enter the market—and how this can impact the U.S. farmer.
Here are 10 things to know about the USDA "resurvey":
1. Why is the USDA recontacting corn producers?
During the first two weeks of December, USDA’s National Agricultural Statistics Service (NASS) conducts their annual December Agricultural Survey (DAS). This survey uses a sample size of approximately 79,000 farm operators across the U.S. During the time that the DAS was being conducted, a material amount of corn acres was unharvested in North and South Dakota, Wisconsin, Minnesota and Michigan. To help derive final yield, harvested acres and production figures for the 2019/20 crop year, NASS determined that recontacting farmers whose crop was unharvested is necessary.
2. Who will the USDA contact?
The USDA will be contacting corn producers who indicated that harvest was incomplete when responding to the DAS survey. Because the harvest pace in North Dakota was historically slow, the government alluded to the notion that a majority of its resources will be focused there.
3. When will the USDA be contacting corn producers?
NASS will recontact producers starting in mid-March.
4. How far behind was the 2019 corn harvest?
Using data from the USDA’s final weekly Crop Progress report on December 9, the U.S. had harvested 92 percent of the national corn crop, which was the fourth slowest harvest on record. At just 43 percent complete, the corn harvest pace in North Dakota was the slowest on record. The harvest pace in Michigan (74 percent complete) was third slowest on record, while the harvest pace in South Dakota and Wisconsin were the seventh slowest on record. At 94 percent complete, the pace in Minnesota was the fourth slowest on record.
5. How important are these states to the nation’s corn production?
For the 2019/20 crop year, North Dakota and Wisconsin are estimated to produce 3% of the total U.S. corn crop; Michigan, 2%; and South Dakota, 4%. Meanwhile Minnesota produces approximately 9% of the national total.
6. How much corn is left to harvest?
Because NASS collected harvest data beyond the final Dec. 9 Crop Progress report, it’s difficult to ascertain how many unharvested acres remain and what the yield may be. When comparing the change in the USDA’s harvested acres figure in the November Crop Production report to the January report we estimated that unharvested acres in North and South Dakota, Minnesota, Michigan and Wisconsin totals approximately 430,000 acres, or less than 0.5% of the USDA’s estimated 81.5 million harvested acres.
7. If state-level data is incomplete, what numbers are contained in the January report?
In an attempt to present the public with the best possible data, NASS asked producers in the DAS to estimate yields and acres for unharvested areas that were intended for harvest. Therefore, the data in the January Crop Production report for the states mentioned above is regarded as the government’s best estimate based on the survey responses. FBN considers this data to be a temporary placeholder.
8. Will NASS collaborate with FSA to help assess the production total?
No. NASS is the statistical arm of the USDA; they have their own survey methods and use their own statistical methods to produce estimates that are unique to the USDA. The FSA uses their own sampling and survey techniques. The USDA does not collaborate with FSA for final harvested acres and yield data.
9. When will these revisions appear?
The government is aiming to publish any revisions in the May 2020 Crop Production report.
10. FBN believes that the delayed harvest is more of a cash market than a futures market event.
While the USDA attempts to deliver final production information for the 2019/20 corn crop, the local and regional cash markets have responded accordingly. Using the above chart, we believe that the cash market appreciation in Michigan and Wisconsin is a result of tighter supplies amid an enhanced demand structure. We believe that the soft basis in North Dakota and north central areas in South Dakota is attributed to a slow Asian export program, which may be negatively influenced in part by lower quality corn with high test weights.
FBN believes that because the volume of unharvested corn resides outside of the key producing states, any changes to yield and final production figures may not possess enough statistical power to “move the needle” on the aggregate U.S. balance sheet. If the USDA’s results do not possess the ability to materially lower the existing 1.892 billion bushel ending stocks, then we believe that the potential impact on futures prices can be minimal.
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