Key facts
- US corn stocks jumped 35% year-on-year to over 2 billion bushels as of September 1.
- Analysts expect the USDA to lower its estimate for corn fed to livestock.
- The USDA is expected to raise its estimate for corn in storage next September to 1.67 billion bushels.
- The USDA has no direct measure of feed use, relying instead on estimates that include residual uses.
- The agency is seeking to improve crop estimates due to declining farmer response rates to surveys.
The U.S. Department of Agriculture is expected to revise down its estimate for how much corn was fed to livestock last year, following a larger-than-anticipated jump in grain stocks. Quarterly data released on September 30 showed over 2 billion bushels of corn in storage at the start of October, a 35% increase from the previous year and 9% above analysts' expectations.
Analysts and economists cited the unexpected rise in stored grain as evidence that the USDA may have overstated corn usage for feed, a key indicator of demand. This situation has renewed scrutiny over the reliability of the USDA's crop estimates, which have faced questions after a series of data missteps.
Jim McCormick, co-founder of AgMarket.Net, stated that the feed and residual number had been too high for months and that the agency "finally came clean." The USDA does not directly measure feed use but estimates it, along with residual uses like wasted grain, after accounting for exports and manufacturing into ethanol.
Analysts had previously questioned the USDA's estimate of a 17% increase in feed use compared to the prior year, especially given the nation's cattle herd was at a 75-year low. Mike Castle, senior commodities economist for StoneX, noted that the feed and residual estimate had appeared to be an "insane outlier."
In its upcoming monthly report, the USDA is expected to raise its estimate for corn in storage next September by 7% to 1.67 billion bushels, according to a Reuters survey of analysts. The agency stated that it updates feed and residual use estimates as new information becomes available and that it conducts extensive surveys of farmers and storage facilities. The USDA also noted that a forecast needing updating does not inherently indicate a problem with forecasting or data collection.
The agency has a history of surprising analysts with September data, and its crop data faced increased scrutiny last year after significant revisions to corn acreage estimates and deep staff losses. The USDA is working to improve its crop estimates as farmer response rates to its surveys have declined over decades.