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| Lanworth Says Differences Between Its, USDA's Estimates Due to Test Weights
Pat Hill DTN Markets Editor
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Wed Jan 13, 2010 04:00 PM CST
OMAHA (DTN) -- The debate over the size of the 2009 corn and soybean crops has gone into overtime.
USDA's crop survey methodology doesn't take into account the principal problem with the crop this year -- test weight, Lanworth says. (Chart courtesy of Lanworth)No sooner had USDA released its Annual Crop Production report Tuesday, pegging corn at a record 13.151 billion bushels and soybeans at a record 3.361 billion bushels, than it also said it may revise those totals, depending on results of further surveys in states where harvest was delayed.
Amid a loud outcry of disbelief among growers who have seen their own crops fall short of expectations, private analyst Lanworth said it still expects USDA eventually will reduce its numbers.
Lanworth made news last August when it announced it was using a combination of satellite imagery, computer models and private surveys to arrive at planted and harvested acreage projections that it said were more accurate than USDA.
DTN and Lanworth have had discussions about possible business partnerships but have no agreements at this point.
Lanworth maintained its projections of smaller crops throughout the fall. In its report to clients Dec. 31, it estimated final production of 12.318 billion bushels of corn and 3.081 billion bushels of soybeans. Those numbers turned out to be 6 percent below USDA's final estimate on corn and 8.2 percent below on soybeans. In acreage, Lanworth's final harvested acreage of 79.39 million acres for corn was 0.3 percent below USDA, and on soybeans, Lanworth was at 75.64 million acres, 1 percent below USDA.
DTN spoke with Nick Kouchoukos, vice president of products, and Corey Cherr, lead agronomist for Lanworth, following the release of Tuesday's USDA reports.
"Like everyone, we were surprised" by USDA's increases in production, Kouchoukos told DTN. "We had gone into the report with open eyes, however. As the report from the 31st laid out, we didn't expect USDA would make full adjustments in this report. Their methodology doesn't let them appreciate the principal problem with the crop this year -- test weight."
USDA officials say their methodology does incorporate low test weights.
Kouchoukos and Cherr said they decided in the fall that they wanted an independent evaluation of their models' performance, so they surveyed grain elevator operators in the states where Lanworth and USDA yield estimates differed the most.
"We knew we had a controversial position this year, based on our understanding of how these crops function," Cherr told DTN. "It was important to us as scientists to get verifiable information. That was the driving force behind wanting to compare our models versus results.
"Lanworth called elevators uniformly distributed across crop areas for a good geographic distribution, and for every one we called, we asked a standard set of questions," Cherr said. "Essentially, we asked about volumetric yield this year and last year and test weights this year and last year and whether it was on a dry basis."
Lanworth's survey showed dry corn test weights in the Corn Belt fell by 5.5 percent from 2008, and, when applied to volumetric yield (bushels per acre), "the test weight data imply corn mass yield well below USDA's November estimate and slightly below Lanworth's most recent model estimates," Lanworth told clients in mid-December.
Lanworth conducted similar surveys for soybeans.
USDA's methodology, which relies on farmer surveys and objective yield data from designated fields, doesn't fully account for test weight, the principal problem with the crop, Kouchoukos said.
"If we were going to point out in starkest terms our differences with USDA, USDA has been very strongly oriented to farmer-reported yield, but in our work, we have not talked directly to any farmers. It's a different methodology. The principal factors at play this year -- moisture and test weights -- those are very challenging qualities to measure. It's tough to ask a farmer or look at a field map [to determine moisture and test weight]. But by looking at models coupled with elevator surveys, we can measure better.
"Elevators taking in grain are making more comprehensive measurements on larger volumes than farmers or USDA.Test weight and moisture are big issues. We think we have a much better way of knowing that than anyone else in this game right now," Kouchoukos said.
Joseph Prusacki, director, statistics division at USDA's National Ag Statistics Service, agreed that test weights are low this year, but he told DTN producers the NASS surveys do account for it. "Sure, it's low test weight, but when [producers] run it across their own scales or take it to the elevators, do they not know, when they look at their tickets? What they report to us should reflect the weights."
It may take some months for USDA to reach final crop production totals.
"We're not saying they won't come to it, but it will come out in the stocks reports," Kouchoukos said.
"We expect reconciliation [between USDA and Lanworth estimates] to be a process, not an event. It's likely to play out in off-farm stocks reports, and we should also see greater-than-expected demand than ordinary. To make the same amount of ethanol will require more bushels of lighter-weight corn.
"The stocks reports are principal means for the crop to grow smaller; next September when NASS reconciles the stocks surveys with acreage and yields -- it's there we will see the final reckoning," Kouchoukos said.
Pat Hill can be reached [email protected].
(AG/KM)
Edited by Maple Leaf 1/14/2010 11:14
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Here is the Lanworth article
