FORT COLLINS, Colo. (Reuters) - Some market participants have been at odds with several numbers recently published by the U.S. Department of Agriculture and had 2020 been a normal year, it could have been prime for a fairly heated discussion at Wednesday’s data user’s meeting.
Officials representing numerous agencies within the USDA are available for public questioning during this biannual, usually in-person meeting. Both 2020 meetings were held virtually due to the coronavirus pandemic.
Two topics were of specific interest to users from the start of Wednesday’s meeting: the surprise U.S. quarterly corn stocks adjustment and Chinese corn imports.
USDA officials have been discussing the unchanged outlook for 2020-21 Chinese corn imports since at least September. China has purchased even more U.S. corn since then, but Beijing has not officially changed its low-tariff quota on corn, and USDA continues to operate under “policy in place” assumptions.
The fact that U.S. corn sales to China comfortably exceed USDA’s full-year target for Chinese imports are not enough to change that number since sales are not yet exports, and sales are always subject to cancellation.
However, USDA might be forced to examine its 7 million-tonne corn import forecast, since customs data shows some 6.7 million tonnes have already arrived in China between January and September. USDA has both 2019-20 and 2020-21 Chinese corn imports at 7 million tonnes.
Unfortunately, the explanation on the U.S. corn stocks debacle was less clear. On Sept. 30, USDA’s National Agricultural Statistics Service (NASS) published the survey-based Sept. 1 U.S. grain stocks, but the agency unexpectedly made a huge revision to the June 1 stocks.
In Wednesday’s meeting, NASS officials explained that the need for a June 1 revision was apparent only after the Sept. 1 survey data was collected and analyzed. The implied quarterly disappearance and residual in particular were well out of the typically observed range, so the June figure was adjusted to bring those relationships more in line with history.
There was no reason offered as to why or how these numbers deviated so much from history, but NASS said that it is not necessarily an indication for the future. The large 2018-19 corn revision in January and the even bigger 2019-20 change last month may have simply been two extreme outliers.
The full revision process for corn will stay in September going forward instead of in January, as it had been prior to the 2019-20 cycle. But that was not obvious this time to many market participants as USDA mistakenly neglected to publish an official notice or update its documentation to reflect the decision.
Market participants can pose questions to USDA officials on a more regular basis than is offered by the data users’ meetings. Agency members are available on Twitter for a question and answer session after every major report from the World Agricultural Outlook Board (WAOB) or NASS, which occur at least monthly.
NASS (@usda_nass on Twitter) has been hosting #StatChat for at least a couple years, and the thread is especially active with questions when a yield or planted area forecast, for example, goes against market expectations.
USDA’s Office of the Chief Economist (@usda_oce on Twitter) hosts #WASDEchat at the same time, but this is much newer than #StatChat, and many industry analysts may not know about it. This is the best place to ask questions about WAOB’s monthly supply and demand report, and it is also where agency officials back in September explained why Chinese corn imports were unchanged.
The next round of reports from NASS and WAOB are due on Nov. 10 at 1200 EST and both of those Twitter discussion threads will be live shortly after release.
USDA was asked in one of the breakout sessions on Wednesday whether the data user’s meeting would continue to be virtual in the future. The answer was that no decision had been made, but there is consideration for perhaps having one live meeting and one virtual meeting.
Having additional virtual options available would further open communication lines between USDA and the public. But permanently reducing live options in favor of virtual ones would be unfortunate because the back-and-forth aspect is lost in the virtual setting and the discussion is never as deep as it could or probably should be.
The opinions expressed here are those of the author, a market analyst for Reuters.
Editing by Sam Holmes
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