Tuesday, September 28, 2010

Week 26

What happened to week 25? Well I got caught up on some of my work tasks and fell behind. I'll be updating next week before the October 8th crop production report. I'll try to get the estimates out Monday afternoon and then later in the week add the trade estimates 'pre-USDA report'. I can see where generally my blog traffic comes from and I think the phrase in the content industry is that I have a dedicated (euphemism for modest sized) following.

I've heard talk of lowered corn yields and the condition information shows a continued decline in yield and production. The condition information starts to be colored by the actual harvest data as we approach the October report so we can see some volatility in the condition numbers even in these last few weeks. Currrent information suggests a downward revision in corn yields.

For soybeans I'm stable while the USDA continues to increase yields. This type of movement is often consistent with me simply being 'off'. I'm not expecting a big change in the USDA numbers but we will see.

For cotton yield and production have been on a steady decline for several weeks. I've done a much better job in cotton than in previous years. As some of you may know this crop was a primary motivation for me to revive and seriously overhaul the model by John Kruse. I'm not yet ready to declare victory, but I'll say early results were quite excellent, particularly in relation to the rest of the trade. Look forward to a few more updates next week before the October Report.

Tuesday, September 14, 2010

Week 24 with USDA comparison

Let me start out by saying that I had a few conversations with people this week about my blog. I feel it important to note that while I am an agricultural economist, and I think the projections have been successful, I don't claim to be a professional. This was always an effort to show I could often beat the majority of trade estimates across all three crops early in the season while dedicating less than 1/2 hour a week to the task, including updating this blog. I hope you have all enjoy this but it is a hobby and isn't endorsed by anyone. Even I might distance myself from my soybean estimate this year.

I think I've tracked corn yields well this year. I'm higher than USDA on production and if I simply corrected the equation for harvesting rate in MN I'd be right on top of USDA for production as well. I tend not to make any adjustments to the equations at all but this one is a basic error and I may this week go back and adjust it.

For soybeans, I continue to lag USDA estimates. I think if you open the spreadsheet you can determine which states I'm the farthest from the USDA estimate.

For cotton I'm not on the low side of USDA but we will see where they end the year.

Harvest is underway so there are only a few weeks of conditions left. After October, USDA estimates normally change very little to the final estimate, so in October I can make a pretty good guess as to how accurate I may have been this year.

Wednesday, September 8, 2010

Week23 UPDATE!

Someone was kind enough to provide the individual trade estimates so I've updated the graphs and some of the discussion for this weeks estimates to include the latest trade estimates, see you again on Friday.
Only modest changes this week. Conditions in corn, soybeans and cotton have not changed substantially in the last few weeks. While I am mid-range of the trade for corn yields, I have a bit higher production numbers which could be in part due to some over estimation of harvesting rates in MN (see below). I'm not solidly in the bottom 1/3 of the trade range for soybean yields and production as I've held my estimates stable but the trade has moved upward. Oddly, I am now on the low end of trade in cotton, which is definitely not where I started the season relative to the trade.
For soybeans, if you look at the spreadsheet, you will note that in the corrected model, I'm slightly lower on yields, but I'm also lower in harvested area. I need to go back and check to see if I'm making some error in a state on harvesting rates, but it isn't immediately clear to me where this mistake might be. For instance, in corn, it is pretty clear that my harvesting rate for Minnesota is to high. There is a fairly stable silage acreage and I've specified an equation which gives me a harvesting rate which pushes silage acreage to low compared to historical volume. I will need to look through the state by state harvesting rates to see where I might be coming up short on harvesting percentages for soybeans.

Thursday, September 2, 2010


Week 22 spreadsheet with State by state yield estimates (3mb)

Monday, August 23, 2010

Week 21

The changes this week are modest this week and show modest recovery from the declines of last week. The uncorrected model was basically flat and the models are largely converging now that we are approaching September. The same behavior can be seen in soybeans where the two models are converging. While the corrected model improves while the uncorrected model declines we see that while conditions are deteriorated the last several weeks, it is less than that seen in a 'normal' year.
Cotton yields and production stabilized after several weeks of decline. The crop still looks like a large one and cotton prices have been strong as world textile demand has risen and crop production issues have occurred outside the US. So for cotton producers it looks like it could be a good year.

Tuesday, August 17, 2010

Week 20

Week 20 spreadsheet

Corn yields and production both fell sharply after weeks of steadily increasing values. Alternatively, soybeans were fairly stable with the two models continuing to converge as we approach late September.

Cotton also showed a significant decline in yield and production, which is a continuation of a decline in values over the last several weeks.

Thursday, August 12, 2010

Spreadsheet with state by state comparisons wth USDA

Tables with USDA comparisons are updated in the spreadsheet
Week 19 spreadsheet

Comparison to USDA

Not bad overall. I think we can start with a discussion of ' a big crop gets bigger'. This isn't just a feeling you get but I suspect a statistical fact. I've mentioned several times that the uncorrected model is if we finish the year in the current conditions, but because they more often decline than they improve or stay the same, the corrected model is the best guess for end yields. But what happens if conditions don't decline through the year? Well the corrected model would be making a downward adjustment for crop problems that never occur, and as we get closer and closer to the end of the season, the adjustment gets smaller and it would increase to meet the uncorrected model.

Now, given the way the USDA seems to do their estimates, in the parameters, there would be embedded this normal decline. A simple fact of estimation. Then in September, even if those input variables didn't really change, yields are likely to be slightly higher because the time left for problems to arise has declined. So in years where conditions stay strong, the crop does get 'bigger' as time goes by. No real surprise here.

I'm on the low side of corn yields but closer on production. I've put up the spreadsheet with state by state comparisons. There are some places where if I updated the model I would go in and look at some of the parameters. For instance, I'm only abandoning 188,000 acres in Minnesota. This is actually mostly silage and silage averages about 450,000 acres, so the USDA harvesting rate looks much more plausible. Also Nebraska, the model did poorly with yields last year and it appears to be doing the same this year. Conditions are similar to last year and last year produced 178 bu/ac. So I think I'm under predicting in Nebraska for production. In the end my off-setting errors in corn put me pretty close to the right national numbers, closer than most of the trade on production. But if you take apart the state by state numbers you could certainly find some disagreement in what I have.

For soybeans, I'd say I'm pretty close. The same issue of a big crop gets bigger apply here as well, and in cotton for that matter too. The USDA yield was on the upper end of the trade estimates as were my model results. I don't have the same abandonment issues in soybeans. Kansas (low) and Minnesota (high) seem to have offsetting errors, but certainly stand out as having significantly different yield numbers than USDA.

For cotton, USDA trimmed yields a bit but production rose slightly. The USDA number hit in the range of trade. Now my yield is above the USDA's but I also have a slightly higher abandonment rate than USDA. USDA shows about 300,000 more acres of cotton being harvested on the same planted area than I do. Almost all of this coming from Texas. I actually have higher yields than USDA in Texas but also higher levels of abandonment which makes the two models 150,000 to 250,000 bales lower than USDA for cotton production in Texas. It is stating the obvious, but this is the difference that matters and will drive the final numbers.

Tuesday, August 10, 2010

Vs. The Trade

I've obtained some updated trade estimates, so I thought I would update the graphics before the Thursday release by the USDA.

I'm in the center of the trade for corn for yield and production. I'm in the top half for soybeans, both yield and production and this time the trade appears to have jumped to the other side of me in cotton. Remember, the uncorrected model is if we finish the year with current conditions while the corrected model takes into account that conditions more often decline than they do improve. In really good years, however, conditions don't decline. The blue line (corrected model) would continue to rise if conditions are simply stable. Are we in one of those years? It is hard to say.