News & Resources

NASS Changing August Crop Data

14 Mar 2019
By Chris Clayton
DTN Ag Policy Editor

OMAHA (DTN) -- USDA's National Agricultural Statistics Service is making some changes in how it projects corn, soybean and cotton production and yields in the August Crop Production reports.

On Tuesday, NASS announced 2019 program changes for its surveys and reports. NASS officials noted the agency conducts a program review every five years following the completion of the Census of Agriculture.

Among the changes announced, NASS eliminated its "Objective Yield" survey -- a field survey -- for corn and soybeans, as well as for cotton outside of the state of Texas. NASS will continue to conduct field surveys for the September, October and November Crop Production reports for corn, soybeans and cotton.

Now, in August, NASS will continue a farmer survey and satellite information will be used to forecast production and yield for corn, cotton and soybeans. This year's report is Aug. 12.

"I think people really don't understand the facts on this one," said Scott Irwin, a professor of agricultural marketing at the University of Illinois. "The facts are the market itself reveals the importance of the August production estimates for corn and soybeans."

That's highlighted by the size of the market reaction in August compared to subsequent USDA releases, Irwin said.

"Year in and year out, the market reacts more to the August estimate than any other," Irwin said. "USDA takes a lot of criticism and people say we should ignore this, but if that was true, then rational actors in the market wouldn't change the price so much when the August numbers are released. If they were really that inaccurate and unimportant, then we shouldn't see the size of market reaction that we do, which means this is a big deal."

DTN Lead Analyst Todd Hultman said USDA's August crop yield estimates for corn and soybeans were not known to be especially accurate. The 90% confidence interval for corn production was plus or minus 6.2% and for soybean production was plus or minus 11.5% over the past 20 years.

Still, the main importance of the August field data was that these not-so-good estimates were often much better than what the trade was expecting and could shake markets out of the delusion of bad predictions, Hultman said.

"I suspect the loss of USDA's Objective Yield data in August will extend the time that bad yield guesses will influence prices," he said.

Lance Honig, chief of the Crops Branch at NASS, said the agency makes a concerted effort every five years to make sure the agency's statistical work is as efficient as possible. This year, the agency took a harder look at the Objective Yield surveys, he said.

"When you look at the Objective Yield, obviously what we are doing very early in the season is counting plants," Honig said. "And the real strength in the Objective Yield comes when the plants are a little bit more developed."

Honig said the survey information from farmers provides good data, and the satellite information is getting better as well.

"So we really felt like, that early in the season, we can get the results we need from those efforts and just delay the beginning of those Objective Yield plots being laid out," he said.

While satellite data is improving, Honig said that wasn't what drove NASS to make the changes in the surveys.

"The accuracy is definitely improving, but I don't feel we're at a point where that is going to be our go-to data," he said. "But it's great data to supplement the other work we are doing."

Irwin said, "Now we have high uncertainty of what the USDA estimate means." He added the field survey work has been done for more than 50 years in August by USDA, though the methodology has changed over time.

"So for a big market-moving report like the August crop report is -- one of the key market-moving reports of the year -- to say we're not going to do half of the surveys that we have relied on for 50 years, that's a huge deal," Irwin said.

Irwin highlighted in a tweet that the corn price moves about four times the normal daily price swing after the August report is released, compared to two times the price movement after the September, October and November reports are released. He added that August isn't as important for soybeans, though.

Looking at recent years, though, corn and soybean farmers might not feel much of a sense of loss for the missing Objective Yield survey for August. December corn has had double-digit downward moves on the day of the August WASDE report in three of the past five years. Likewise, November soybeans had three negative moves in excess of 30 cents in three of the past five years.

The sample counts in the Objective Yield surveys from September through November will be lowered and adjusted for corn and soybeans as well. In 10 corn states surveyed, the count could drop from 1,920 samples last year to 1,015 samples this year. For 11 soybean states surveyed, the count could drop from 1,835 samples to 1,050 samples. Those counts aren't final yet, as they are still being reviewed.

"We went back and evaluated the strength of the indications we were getting and did some work analyzing and determined, with some reduced sample sizes, we can still keep a high level of precision, particularly at a regional level," Honig said. "We can draw from that strength and utilize the other information that we have and still maintain those strong estimates at the state level."

For cotton, the August Objective Yield survey will be dropped for every state but Texas. NASS will conduct 840 sample surveys each month from September to December, but will drop Louisiana and North Carolina as sampling states.

"Early in the season, the information we get from the farmers' survey is very valuable," Honig said. "Going into the fields doesn't necessarily add as much to the equation later on as those plants start to develop more. So we really feel like there are some efficiencies to be gained."

For more information on changes to NASS crop reports, go to https://www.nass.usda.gov/…

Chris Clayton can be reached at Chris.Clayton@dtn.com

Follow him on Twitter @ChrisClaytonDTN

(AG/CZ)