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From the Furrow – Dr. Seth Meyer – July 23, 2024
In our weekly series From the Furrow, host Mike McGinnis and fellow grain geeks shed light on current market conditions and how grain producers can take action to manage their risk.
This week, Mike is joined Dr. Seth Meyer, Chief Economist with USDA. How does USDA work with farmers to gather acreage, production and other grain data? How hard is it to assess damage done by recent flooding in key growing states? Mike and Seth discuss those topics and a whole lot more.
Questions or comments? Topics you’d like to hear us discuss? Contact us at [email protected].
Show Transcript
(Transcript auto-generated)
00;00;00;13 – 00;00;17;00
VOICEOVER
Futures trading involves risk and is not suitable for all investors. Content provided in the segment is not for educational purposes and is not a solicitation to buy or sell commodities. Opinions and statements of guests not affiliated with every egg of their own, and do not reflect the views of the brand. The accuracy of their statements can not be guaranteed by a Barack.
00;00;17;03 – 00;00;38;14
MIKE
Hello and welcome to From the Furrow, brought to you by Ever AG Insights. Each week we talk with subject matter experts on news and topics affecting the grain markets. I’m your host, Mike McGinnis, and we get started today with a review of the markets. The corn market is up $0.04 at 404 for the September new crop, December at 419 for soybeans, old crop August up $0.10 at 1128.
00;00;38;14 – 00;01;02;22
MIKE
Meanwhile the new crop November contract up $0.12 at 1080. And the soybean market has seen a roughly 50 cent rally just this week. So a real strong market going right now for the soybean market. Meanwhile, September wheat futures down slightly today at 547. Today’s date is Tuesday, July 23rd. Our guest today, USDA is ag economist Seth Meyer. Seth, thanks for joining us.
00;01;02;22 – 00;01;21;10
MIKE
You are somebody that we have been trying to reach for a number of months. We spoke at the January AG Outlook conference and we agreed then that be really nice to sit down and talk some time. So we want to welcome you to the From the Furrow podcast. First off, let’s talk about, in general, the corn crop, the soybean crop that’s in the field right now growing.
00;01;21;11 – 00;01;27;15
MIKE
It seems like things are going well for most of the corn belt. There are pockets of course. But give us your perspective.
00;01;27;20 – 00;01;44;17
SETH
Yeah. So I think overall if we look at kind of some of the conditions, ratings does look like overall the crops doing fairly well. There will always be pockets where we have difficulty and have trouble. And so, you know, it’s going to be August year where we try to take a holistic look and look across the country and see where we’re at.
00;01;44;19 – 00;02;05;24
MIKE
One of the questions that we wanted to talk about was about the reports. And we’ll get into specifically some of the reports, but what is the process? I know there’s a form that goes out to farmers, and it’s a survey in in some reports, and you’re really trying to get this idea that farmer surveys and the rate of return to the USDA seems to be slowing over the years.
00;02;05;26 – 00;02;17;12
MIKE
I don’t think it’s any secret, but can you give us some sense of what the rate of return on farmer surveys used to assemble the USDA’s acreage production and set of reports? What is that rate of return as of today?
00;02;17;14 – 00;02;37;05
SETH
Yeah. So I think we can’t call a single rate of return for my colleagues over at Nass. But, you know, you’re talking high 50s, low 60s, mid 60s. Some reports are 70s, low 70s. You’d always like it to be higher. And I think that part of me coming out and having these conversations with you is to try and make the case that this is important, right?
00;02;37;06 – 00;02;53;10
SETH
This is something that the farmers may not always see the benefit. About half the time when the report comes out, the prices go down and they don’t like that, right. But it does level the playing field once a month. It levels the playing field. There are always folks that know more about what the crop is doing than the producer themselves.
00;02;53;12 – 00;03;05;10
SETH
We level the playing field once a month. So again, you know good return rates when you think about things. If you’re a surveyor, they sound like really great return rates. Always would like them to be better, but we got to make the case for it.
00;03;05;17 – 00;03;25;23
MIKE
And just so the listeners understand that you are USDA ag economist also, but we’re we’re referring to the reports that Nass is in charge of. But, you know, when folks outside of USDA, I think just combine USDA Nass, but you as a USDA employee know that there is a separation of some sense. Right? So maybe we should explain to the listener a little bit of that perspective.
00;03;25;25 – 00;03;49;13
SETH
All right. So both Nass and the office of the Chief Economist and I’m the chief economist, we both work within USDA. But Nass is a different group. They’re a statistical agency. My group are the folks that knew the was the report. So NASA’s statisticians and if any of you know any statisticians, they like to touch and measure and they’re saying, hey, here’s where estimated where we’re at now.
00;03;49;14 – 00;04;10;03
SETH
My crew takes that and expands it and says, okay, what is the dynamics on the demand side in the United States? What are the dynamics looking like going forward? And then what do things look like around the world? So Nass will come and say, here’s what we’ve measured for acreage. Here’s what we’ve measured for yields. Here’s what the crush report for ethanol looks like so far.
00;04;10;10 – 00;04;31;27
SETH
And my crew will say, okay, that’s where we’re at now. What do the economics look like going forward? How does the global market look? So two separate agencies both within lock up and we are their first customers at 6 a.m. inside of lock up. They bring the information down that helps us finalize our report making. And we release this all at noon.
00;04;31;27 – 00;04;45;27
MIKE
Very good. And I think that description and explanation will help our listeners back to the gathering of information for those reports and the surveys. What can USDA do to incentivize farmers to help USDA gather that accurate information?
00;04;46;02 – 00;05;05;29
SETH
Yeah. So I think we really do have to make the case that in the absence of these reports, there is a lot of information asymmetry. The big grain traders, folks who may be operating elevators over a wide span, other folks who are paying for satellite imagery may know more than the average farmer. They do know more than the average farmer.
00;05;05;29 – 00;05;27;26
SETH
And so the average farmer is at a disadvantage. The whole reason these reports were created was because an incident in the past, with a huge amount of market asymmetry, for which the producers, I think it’s fair to say, were hurt by virtue of the fact that some people knew a lot and the farmers didn’t. Price moved, farmers didn’t get to take advantage of that price move.
00;05;28;03 – 00;05;31;04
SETH
So it is incumbent upon us to make that case.
00;05;31;05 – 00;05;42;21
MIKE
Do you feel that USDA Nass folks get the credit that they deserve for collecting the vast amounts of data year round? Because after all, markets around the world rely these numbers?
00;05;42;24 – 00;06;04;08
SETH
So to your last point, I do a little bit of travel overseas, and almost universally I’ll go someplace and the government officials there will express almost disappointment that their ag sector relies on our numbers, not their own governments. No, they trust what we’re saying as being unbiased. I think that that’s really important. It is a universal good here.
00;06;04;08 – 00;06;23;26
SETH
But the true reason we do this isn’t because I want to say help the Brazilian farmers market their grain. We care about Brazil because we care about how it affects our own markets. So absolutely, at its core, it’s trying to help facilitate markets within the United States. So the other question was, do I think NASA gets credit for this?
00;06;24;00 – 00;06;49;17
SETH
It’s funny. Reports aren’t flashy. They’re not sexy. It’s not something you, you know, hey, this is really exciting. And, sometimes I think it’s hard for folks to make a press release that says, hey, I’m going to give you the same report I did last year. Isn’t that exciting? Right? But it’s absolutely critical. I think it is sometimes hard to sell the importance of this in a flashy way, but folks need to realize all the things that this kind of work underpins, right?
00;06;49;20 – 00;07;09;11
SETH
You know, the fact that we had this kind of data helped with the formation of crop insurance early on, and now crop insurance develops its own data. And certainly NASA makes use of any bits of data they can. They want to be timely, but it make use of any bits of data they can. But policy make other actions that the government wants to take.
00;07;09;11 – 00;07;29;18
SETH
In terms of policy, that’s all relies on good data. So people need to think, not narrowly. I don’t like this report because prices went down today and I hadn’t yet marketed all I wanted to market. That’s true, I understand that, but you got to look at the underlying value of this. And so it is something we have to sell for people who aren’t deep into it.
00;07;29;18 – 00;07;33;13
SETH
It’s harder to sell. It’s not nearly as flashy as some other things. For a press release.
00;07;33;14 – 00;07;49;15
MIKE
This year’s crop season doesn’t appear any way to be a big prevented planting year. Maybe in some spots of the corn Belt, but in general, it doesn’t appear to be that way. What’s your assessment there? And also, is it hard to assess the number of acres impacted by flooding?
00;07;49;15 – 00;08;19;06
SETH
Yeah. So the second question is a great question that had some good, interesting conversations with Nass about this. I think you’re right in terms of I mean, we’ve had some big prevent plant years recently, I think most recently of 2019, where we had a huge amount of prevent plant. And this one’s probably if we look at both intentions, which to me incorporates some amount of anticipated wet plant to what acreage report in June actually was, tells me that prevent plant is in a big swing this year does happen again.
00;08;19;06 – 00;08;52;03
SETH
I’ll bring up 2019 is a year where we had a lot of preventative plans. When it comes to flooding, it is interesting in that is it flooding? If it’s flooding, which takes out acreage that’s captured in the field surveys, to some extent. So if it never gets planted, that’s one issue. It’s prevent plant. But if it’s acres that were planted and then are damaged by flooding, you got to remember that in September NASA starts going out into the field and does the physical objective yield surveys so that when they walk into a field place they may have selected may be flooded out?
00;08;52;03 – 00;09;14;20
SETH
Right. It may be a low spot. And there may be nothing there. And so they know that that’s now no longer an area which there’s a crop being produced, that it’s been damaged by ponding or flooding out. So there’s kind of two ways you get it from the prevent plant. What did you actually get planted. And then the second one is if it’s damaged subsequently they see it through the objective yield surveys, which for corn and beans starts in September.
00;09;14;25 – 00;09;31;16
MIKE
Now for the reports throughout the year. And I know that you’re not directly tied to the Nass statistics side of it, but what report throughout the year really reminds you that what I like to say pressure is, is a privilege, or in other words, a one that you might circle on the calendar for each year? Or do you circle all of them?
00;09;31;18 – 00;09;46;19
SETH
I love lock up. It’s a specific personality type, but I love lock up so I can find something in every lock up. So they’re like your children. You can’t pick a favorite one will leave out the bad children, but the ones I like during the year is May was the report because we’re rolling out the next crop year.
00;09;46;19 – 00;10;05;07
SETH
So it’s really kind of in the ag system. We’re saying, let’s take our first book out a year as to what the next crop might look like. Then I really like the March intentions. Farmers are thinking about what they’re going to plant. It’s not like a survey where you’re actually measuring what’s actually happening. You’re measuring, hey, farmers, what do you think you’re going to do?
00;10;05;07 – 00;10;21;00
SETH
And by its very nature, you’re asking farmers what they’re going to do before they do it. The market has a chance to respond. What do you think you’re going to do it right at this moment of time? And that may change if the market says, hey, you farmers are planning too much, corner planning too much beans, they don’t respond.
00;10;21;00 – 00;10;40;00
SETH
So to me, that’s another unique one that I really love. And then as an Iowan, I really love August, September and October crop production was the reports, because now we’re starting to get into, you know, your past, the critical development stages. And NASA’s out there either asking the farmers or actually measuring things. And like I said, I’m in Iowa.
00;10;40;00 – 00;10;58;00
SETH
And so figuring out what corn and bean yields are going to be for the year is always exciting for me. Probably the biggest consequential report is that June 30th acreage report with quarterly grain stocks and the quarterly grain stocks are a way that we get measurement of kind of flows of demand. Right. You’re trying to back into what you think flows of demand are.
00;10;58;01 – 00;11;08;11
SETH
So the June acreage plus grain stocks is always a favorite too. And then I just like hogs and pigs report I know we’re here and talking about crops, but we do hogs and pigs too. I enjoy the hogs and pigs reports.
00;11;08;16 – 00;11;09;22
MIKE
That’s because you’re from Iowa.
00;11;09;25 – 00;11;12;07
SETH
That’s because I’m for all the things that I don’t get help.
00;11;12;07 – 00;11;38;18
MIKE
It was great to follow the hogs and Pigs report. If you’re from Iowa, you know, I think it’s obvious a lot of people, if they are complaining about USDA numbers, sometimes it’s that they choose to tweak monthly numbers rather than make too big of adjustments, even when it seems obvious that a bigger or smaller number was anticipated. Can you shed some light on this idea that of the tweaking, instead of making those moves, when everybody in the world seems to think that it should have been, where did they get those acres?
00;11;38;18 – 00;11;41;03
MIKE
Or how did they had so many bushels? I mean, great.
00;11;41;03 – 00;12;00;12
SETH
Question, because we don’t actually parcel in a chain. I think people think that, but they only remember the time that the drought continued to get worse. And so, you know, droughts don’t happen overnight. Right. And I think one important element I want to keep this in your mind of what we do is we assume normal weather going forward.
00;12;00;14 – 00;12;17;29
SETH
So if things are a little dry, we don’t assume they’re going to continue to get dry. And that drought is going to develop over 2 or 3 months, and it’s going to be a really horrible drought. We don’t do that. And most of the time that’s probably not a bad guess anyway. But think people then think we’re parceling it in, right?
00;12;17;29 – 00;12;35;18
SETH
But we’re not. Droughts don’t happen overnight. Damage doesn’t happen overnight. It happens over time. If we think we know where we need to be, we will go there. We don’t parcel in changes, okay. Because I think a lot of folks start to say, well, you know, it’s really dry. And what if it keeps getting dry? We’ll be here.
00;12;35;18 – 00;13;01;14
SETH
Well, that’s not what we assume. And so we don’t parcel things in most damage we can talk about flood damage occurs very quickly. Most of the time the early assessments are not quite on. we can talk about things like the direct show in Iowa where you’re trying to say, how big is it? What kind of changes? Those are instantaneous changes, but a lot of things about a crop that ends up in poor condition at the end of the year are things which develop over time, right?
00;13;01;14 – 00;13;08;24
SETH
They don’t happen all in one day. And so we don’t parcel things, and we take account as those damages accrue.
00;13;08;27 – 00;13;21;19
MIKE
Finally, the upcoming August 12th report. Again, you mentioned earlier crop production wisely. And what about the acreage? Let’s talk a little bit about the efforts of Nass, offering up acreage estimates for prevented planting and failed acreage.
00;13;21;21 – 00;13;39;27
SETH
Yeah. So it’s interesting. Landsat Nass was at data user. So we reach out and talk to the public all the time about the way they use data. Noted that the quality and completeness of FSA data has improved to the point where they have access to that data, they have access to the FSA data, they have access to satellite imagery.
00;13;39;27 – 00;14;00;23
SETH
They will use any bit of data they can as soon as they think it helps their estimates. They used to wait all the way until October to use the FSA data, because that’s when it would roll in and it would be more complete. Last year they pulled that information forward to September, and Lance said their intention is to try to do the same in August of this year.
00;14;00;23 – 00;14;18;03
SETH
The thought is, is this will help us improve our acreage and yield and other bits of information for our corn and soybean estimates earlier in August. Now, the other part of this is it’s still a tricky to do this in August. The crops are not done in August, right. The crops are not done. So you’re still trying to say, hey, what is acreage doing?
00;14;18;03 – 00;14;38;22
SETH
Maybe what is yield doing? So you’re still developing a you’re still putting out a yield into the into a developing crop. And in August they’re going to pull the FSA data forward. And the other element to this is also reaching out and surveying farmers. They asked farmers. It’s the subjective yield part of this asking farmers what do you think your yields are going to be?
00;14;38;25 – 00;14;57;18
SETH
And they’re using satellite imagery, and they’re bringing in all this data together for August. Then in September, they’ll actually do the they’ll add to that the objective part of the yield. And what is the objective part of the yield. They go out into the field and for corn they start with measuring stocks. Then they do stocks and ears and then they’re doing stocks ear size.
00;14;57;18 – 00;15;07;02
SETH
And so as the crop matures they’re taking more and more of that crop. And then finally they pull the ear and send it to the lab. They start doing those field measurements in September.
00;15;07;02 – 00;15;16;17
MIKE
Very good. Well we could talk all day about this. I do appreciate you taking time, Seth. I know that your schedule is full and you’re very busy person, so we do appreciate you joining us today.
00;15;16;19 – 00;15;19;19
SETH
Thank you very much for giving me a chance to talk about all of this. I appreciate it.
00;15;19;19 – 00;15;35;06
MIKE
You bet. USDA chief economist Seth Meyer I’m Mike McGinnis, and thanks for joining us today. If you’ve enjoyed listening to From the Furrow, be sure to tell a friend or to and subscribe to us wherever you listen to your podcasts. Thank you to the SAG Insights Crew for their work on today’s show.
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In our weekly series From the Furrow, host Mike McGinnis and fellow grain geeks shed light on current market conditions and how grain producers can take action to manage their risk.
This week, Mike is joined Dr. Seth Meyer, Chief Economist with USDA. How does USDA work with farmers to gather acreage, production and other grain data? How hard is it to assess damage done by recent flooding in key growing states? Mike and Seth discuss those topics and a whole lot more.
Questions or comments? Topics you’d like to hear us discuss? Contact us at [email protected].
Show Transcript
(Transcript auto-generated)
00;00;00;13 – 00;00;17;00
VOICEOVER
Futures trading involves risk and is not suitable for all investors. Content provided in the segment is not for educational purposes and is not a solicitation to buy or sell commodities. Opinions and statements of guests not affiliated with every egg of their own, and do not reflect the views of the brand. The accuracy of their statements can not be guaranteed by a Barack.
00;00;17;03 – 00;00;38;14
MIKE
Hello and welcome to From the Furrow, brought to you by Ever AG Insights. Each week we talk with subject matter experts on news and topics affecting the grain markets. I’m your host, Mike McGinnis, and we get started today with a review of the markets. The corn market is up $0.04 at 404 for the September new crop, December at 419 for soybeans, old crop August up $0.10 at 1128.
00;00;38;14 – 00;01;02;22
MIKE
Meanwhile the new crop November contract up $0.12 at 1080. And the soybean market has seen a roughly 50 cent rally just this week. So a real strong market going right now for the soybean market. Meanwhile, September wheat futures down slightly today at 547. Today’s date is Tuesday, July 23rd. Our guest today, USDA is ag economist Seth Meyer. Seth, thanks for joining us.
00;01;02;22 – 00;01;21;10
MIKE
You are somebody that we have been trying to reach for a number of months. We spoke at the January AG Outlook conference and we agreed then that be really nice to sit down and talk some time. So we want to welcome you to the From the Furrow podcast. First off, let’s talk about, in general, the corn crop, the soybean crop that’s in the field right now growing.
00;01;21;11 – 00;01;27;15
MIKE
It seems like things are going well for most of the corn belt. There are pockets of course. But give us your perspective.
00;01;27;20 – 00;01;44;17
SETH
Yeah. So I think overall if we look at kind of some of the conditions, ratings does look like overall the crops doing fairly well. There will always be pockets where we have difficulty and have trouble. And so, you know, it’s going to be August year where we try to take a holistic look and look across the country and see where we’re at.
00;01;44;19 – 00;02;05;24
MIKE
One of the questions that we wanted to talk about was about the reports. And we’ll get into specifically some of the reports, but what is the process? I know there’s a form that goes out to farmers, and it’s a survey in in some reports, and you’re really trying to get this idea that farmer surveys and the rate of return to the USDA seems to be slowing over the years.
00;02;05;26 – 00;02;17;12
MIKE
I don’t think it’s any secret, but can you give us some sense of what the rate of return on farmer surveys used to assemble the USDA’s acreage production and set of reports? What is that rate of return as of today?
00;02;17;14 – 00;02;37;05
SETH
Yeah. So I think we can’t call a single rate of return for my colleagues over at Nass. But, you know, you’re talking high 50s, low 60s, mid 60s. Some reports are 70s, low 70s. You’d always like it to be higher. And I think that part of me coming out and having these conversations with you is to try and make the case that this is important, right?
00;02;37;06 – 00;02;53;10
SETH
This is something that the farmers may not always see the benefit. About half the time when the report comes out, the prices go down and they don’t like that, right. But it does level the playing field once a month. It levels the playing field. There are always folks that know more about what the crop is doing than the producer themselves.
00;02;53;12 – 00;03;05;10
SETH
We level the playing field once a month. So again, you know good return rates when you think about things. If you’re a surveyor, they sound like really great return rates. Always would like them to be better, but we got to make the case for it.
00;03;05;17 – 00;03;25;23
MIKE
And just so the listeners understand that you are USDA ag economist also, but we’re we’re referring to the reports that Nass is in charge of. But, you know, when folks outside of USDA, I think just combine USDA Nass, but you as a USDA employee know that there is a separation of some sense. Right? So maybe we should explain to the listener a little bit of that perspective.
00;03;25;25 – 00;03;49;13
SETH
All right. So both Nass and the office of the Chief Economist and I’m the chief economist, we both work within USDA. But Nass is a different group. They’re a statistical agency. My group are the folks that knew the was the report. So NASA’s statisticians and if any of you know any statisticians, they like to touch and measure and they’re saying, hey, here’s where estimated where we’re at now.
00;03;49;14 – 00;04;10;03
SETH
My crew takes that and expands it and says, okay, what is the dynamics on the demand side in the United States? What are the dynamics looking like going forward? And then what do things look like around the world? So Nass will come and say, here’s what we’ve measured for acreage. Here’s what we’ve measured for yields. Here’s what the crush report for ethanol looks like so far.
00;04;10;10 – 00;04;31;27
SETH
And my crew will say, okay, that’s where we’re at now. What do the economics look like going forward? How does the global market look? So two separate agencies both within lock up and we are their first customers at 6 a.m. inside of lock up. They bring the information down that helps us finalize our report making. And we release this all at noon.
00;04;31;27 – 00;04;45;27
MIKE
Very good. And I think that description and explanation will help our listeners back to the gathering of information for those reports and the surveys. What can USDA do to incentivize farmers to help USDA gather that accurate information?
00;04;46;02 – 00;05;05;29
SETH
Yeah. So I think we really do have to make the case that in the absence of these reports, there is a lot of information asymmetry. The big grain traders, folks who may be operating elevators over a wide span, other folks who are paying for satellite imagery may know more than the average farmer. They do know more than the average farmer.
00;05;05;29 – 00;05;27;26
SETH
And so the average farmer is at a disadvantage. The whole reason these reports were created was because an incident in the past, with a huge amount of market asymmetry, for which the producers, I think it’s fair to say, were hurt by virtue of the fact that some people knew a lot and the farmers didn’t. Price moved, farmers didn’t get to take advantage of that price move.
00;05;28;03 – 00;05;31;04
SETH
So it is incumbent upon us to make that case.
00;05;31;05 – 00;05;42;21
MIKE
Do you feel that USDA Nass folks get the credit that they deserve for collecting the vast amounts of data year round? Because after all, markets around the world rely these numbers?
00;05;42;24 – 00;06;04;08
SETH
So to your last point, I do a little bit of travel overseas, and almost universally I’ll go someplace and the government officials there will express almost disappointment that their ag sector relies on our numbers, not their own governments. No, they trust what we’re saying as being unbiased. I think that that’s really important. It is a universal good here.
00;06;04;08 – 00;06;23;26
SETH
But the true reason we do this isn’t because I want to say help the Brazilian farmers market their grain. We care about Brazil because we care about how it affects our own markets. So absolutely, at its core, it’s trying to help facilitate markets within the United States. So the other question was, do I think NASA gets credit for this?
00;06;24;00 – 00;06;49;17
SETH
It’s funny. Reports aren’t flashy. They’re not sexy. It’s not something you, you know, hey, this is really exciting. And, sometimes I think it’s hard for folks to make a press release that says, hey, I’m going to give you the same report I did last year. Isn’t that exciting? Right? But it’s absolutely critical. I think it is sometimes hard to sell the importance of this in a flashy way, but folks need to realize all the things that this kind of work underpins, right?
00;06;49;20 – 00;07;09;11
SETH
You know, the fact that we had this kind of data helped with the formation of crop insurance early on, and now crop insurance develops its own data. And certainly NASA makes use of any bits of data they can. They want to be timely, but it make use of any bits of data they can. But policy make other actions that the government wants to take.
00;07;09;11 – 00;07;29;18
SETH
In terms of policy, that’s all relies on good data. So people need to think, not narrowly. I don’t like this report because prices went down today and I hadn’t yet marketed all I wanted to market. That’s true, I understand that, but you got to look at the underlying value of this. And so it is something we have to sell for people who aren’t deep into it.
00;07;29;18 – 00;07;33;13
SETH
It’s harder to sell. It’s not nearly as flashy as some other things. For a press release.
00;07;33;14 – 00;07;49;15
MIKE
This year’s crop season doesn’t appear any way to be a big prevented planting year. Maybe in some spots of the corn Belt, but in general, it doesn’t appear to be that way. What’s your assessment there? And also, is it hard to assess the number of acres impacted by flooding?
00;07;49;15 – 00;08;19;06
SETH
Yeah. So the second question is a great question that had some good, interesting conversations with Nass about this. I think you’re right in terms of I mean, we’ve had some big prevent plant years recently, I think most recently of 2019, where we had a huge amount of prevent plant. And this one’s probably if we look at both intentions, which to me incorporates some amount of anticipated wet plant to what acreage report in June actually was, tells me that prevent plant is in a big swing this year does happen again.
00;08;19;06 – 00;08;52;03
SETH
I’ll bring up 2019 is a year where we had a lot of preventative plans. When it comes to flooding, it is interesting in that is it flooding? If it’s flooding, which takes out acreage that’s captured in the field surveys, to some extent. So if it never gets planted, that’s one issue. It’s prevent plant. But if it’s acres that were planted and then are damaged by flooding, you got to remember that in September NASA starts going out into the field and does the physical objective yield surveys so that when they walk into a field place they may have selected may be flooded out?
00;08;52;03 – 00;09;14;20
SETH
Right. It may be a low spot. And there may be nothing there. And so they know that that’s now no longer an area which there’s a crop being produced, that it’s been damaged by ponding or flooding out. So there’s kind of two ways you get it from the prevent plant. What did you actually get planted. And then the second one is if it’s damaged subsequently they see it through the objective yield surveys, which for corn and beans starts in September.
00;09;14;25 – 00;09;31;16
MIKE
Now for the reports throughout the year. And I know that you’re not directly tied to the Nass statistics side of it, but what report throughout the year really reminds you that what I like to say pressure is, is a privilege, or in other words, a one that you might circle on the calendar for each year? Or do you circle all of them?
00;09;31;18 – 00;09;46;19
SETH
I love lock up. It’s a specific personality type, but I love lock up so I can find something in every lock up. So they’re like your children. You can’t pick a favorite one will leave out the bad children, but the ones I like during the year is May was the report because we’re rolling out the next crop year.
00;09;46;19 – 00;10;05;07
SETH
So it’s really kind of in the ag system. We’re saying, let’s take our first book out a year as to what the next crop might look like. Then I really like the March intentions. Farmers are thinking about what they’re going to plant. It’s not like a survey where you’re actually measuring what’s actually happening. You’re measuring, hey, farmers, what do you think you’re going to do?
00;10;05;07 – 00;10;21;00
SETH
And by its very nature, you’re asking farmers what they’re going to do before they do it. The market has a chance to respond. What do you think you’re going to do it right at this moment of time? And that may change if the market says, hey, you farmers are planning too much, corner planning too much beans, they don’t respond.
00;10;21;00 – 00;10;40;00
SETH
So to me, that’s another unique one that I really love. And then as an Iowan, I really love August, September and October crop production was the reports, because now we’re starting to get into, you know, your past, the critical development stages. And NASA’s out there either asking the farmers or actually measuring things. And like I said, I’m in Iowa.
00;10;40;00 – 00;10;58;00
SETH
And so figuring out what corn and bean yields are going to be for the year is always exciting for me. Probably the biggest consequential report is that June 30th acreage report with quarterly grain stocks and the quarterly grain stocks are a way that we get measurement of kind of flows of demand. Right. You’re trying to back into what you think flows of demand are.
00;10;58;01 – 00;11;08;11
SETH
So the June acreage plus grain stocks is always a favorite too. And then I just like hogs and pigs report I know we’re here and talking about crops, but we do hogs and pigs too. I enjoy the hogs and pigs reports.
00;11;08;16 – 00;11;09;22
MIKE
That’s because you’re from Iowa.
00;11;09;25 – 00;11;12;07
SETH
That’s because I’m for all the things that I don’t get help.
00;11;12;07 – 00;11;38;18
MIKE
It was great to follow the hogs and Pigs report. If you’re from Iowa, you know, I think it’s obvious a lot of people, if they are complaining about USDA numbers, sometimes it’s that they choose to tweak monthly numbers rather than make too big of adjustments, even when it seems obvious that a bigger or smaller number was anticipated. Can you shed some light on this idea that of the tweaking, instead of making those moves, when everybody in the world seems to think that it should have been, where did they get those acres?
00;11;38;18 – 00;11;41;03
MIKE
Or how did they had so many bushels? I mean, great.
00;11;41;03 – 00;12;00;12
SETH
Question, because we don’t actually parcel in a chain. I think people think that, but they only remember the time that the drought continued to get worse. And so, you know, droughts don’t happen overnight. Right. And I think one important element I want to keep this in your mind of what we do is we assume normal weather going forward.
00;12;00;14 – 00;12;17;29
SETH
So if things are a little dry, we don’t assume they’re going to continue to get dry. And that drought is going to develop over 2 or 3 months, and it’s going to be a really horrible drought. We don’t do that. And most of the time that’s probably not a bad guess anyway. But think people then think we’re parceling it in, right?
00;12;17;29 – 00;12;35;18
SETH
But we’re not. Droughts don’t happen overnight. Damage doesn’t happen overnight. It happens over time. If we think we know where we need to be, we will go there. We don’t parcel in changes, okay. Because I think a lot of folks start to say, well, you know, it’s really dry. And what if it keeps getting dry? We’ll be here.
00;12;35;18 – 00;13;01;14
SETH
Well, that’s not what we assume. And so we don’t parcel things in most damage we can talk about flood damage occurs very quickly. Most of the time the early assessments are not quite on. we can talk about things like the direct show in Iowa where you’re trying to say, how big is it? What kind of changes? Those are instantaneous changes, but a lot of things about a crop that ends up in poor condition at the end of the year are things which develop over time, right?
00;13;01;14 – 00;13;08;24
SETH
They don’t happen all in one day. And so we don’t parcel things, and we take account as those damages accrue.
00;13;08;27 – 00;13;21;19
MIKE
Finally, the upcoming August 12th report. Again, you mentioned earlier crop production wisely. And what about the acreage? Let’s talk a little bit about the efforts of Nass, offering up acreage estimates for prevented planting and failed acreage.
00;13;21;21 – 00;13;39;27
SETH
Yeah. So it’s interesting. Landsat Nass was at data user. So we reach out and talk to the public all the time about the way they use data. Noted that the quality and completeness of FSA data has improved to the point where they have access to that data, they have access to the FSA data, they have access to satellite imagery.
00;13;39;27 – 00;14;00;23
SETH
They will use any bit of data they can as soon as they think it helps their estimates. They used to wait all the way until October to use the FSA data, because that’s when it would roll in and it would be more complete. Last year they pulled that information forward to September, and Lance said their intention is to try to do the same in August of this year.
00;14;00;23 – 00;14;18;03
SETH
The thought is, is this will help us improve our acreage and yield and other bits of information for our corn and soybean estimates earlier in August. Now, the other part of this is it’s still a tricky to do this in August. The crops are not done in August, right. The crops are not done. So you’re still trying to say, hey, what is acreage doing?
00;14;18;03 – 00;14;38;22
SETH
Maybe what is yield doing? So you’re still developing a you’re still putting out a yield into the into a developing crop. And in August they’re going to pull the FSA data forward. And the other element to this is also reaching out and surveying farmers. They asked farmers. It’s the subjective yield part of this asking farmers what do you think your yields are going to be?
00;14;38;25 – 00;14;57;18
SETH
And they’re using satellite imagery, and they’re bringing in all this data together for August. Then in September, they’ll actually do the they’ll add to that the objective part of the yield. And what is the objective part of the yield. They go out into the field and for corn they start with measuring stocks. Then they do stocks and ears and then they’re doing stocks ear size.
00;14;57;18 – 00;15;07;02
SETH
And so as the crop matures they’re taking more and more of that crop. And then finally they pull the ear and send it to the lab. They start doing those field measurements in September.
00;15;07;02 – 00;15;16;17
MIKE
Very good. Well we could talk all day about this. I do appreciate you taking time, Seth. I know that your schedule is full and you’re very busy person, so we do appreciate you joining us today.
00;15;16;19 – 00;15;19;19
SETH
Thank you very much for giving me a chance to talk about all of this. I appreciate it.
00;15;19;19 – 00;15;35;06
MIKE
You bet. USDA chief economist Seth Meyer I’m Mike McGinnis, and thanks for joining us today. If you’ve enjoyed listening to From the Furrow, be sure to tell a friend or to and subscribe to us wherever you listen to your podcasts. Thank you to the SAG Insights Crew for their work on today’s show.
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