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Understanding USDA Corn and Soybean Production Forecasts: An Overview of Methods, Performance and Market Impacts

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  • Good, Darrel L.
  • Irwin, Scott H.

Abstract

The purpose of this report is to improve understanding of USDA crop forecasting methods, performance and market impact. A review of USDA’s forecasting procedures and methodology confirmed the objectivity and consistency of the forecasting process over time. No changes in methodology occurred in 2003. Month-to-month changes in corn and soybean production forecasts from 1970 through 2003 indicated little difference in magnitude and direction of monthly changes over time. USDA production forecast errors were largest in August and smaller in subsequent forecasts. There appeared to be no trend in the size or direction of forecast errors over time. On average, USDA corn production forecasts were more accurate than private market forecasts over 1970-2003, with the exception of August forecasts since the mid-1980s. Private market forecasts in soybeans were more accurate than USDA forecasts for August, regardless of the time period considered. As the growing season progresses the USDA’s relative accuracy in soybeans improved. USDA corn production forecasts had the largest impact on corn futures prices in August and recent price reactions have been somewhat larger than historical reactions. For soybeans, the largest reactions in futures prices occurred in August and September, but recent reactions have been large in October. Overall, the analysis suggests the USDA performs reasonably well in generating crop production forecasts for corn and soybeans.

Suggested Citation

  • Good, Darrel L. & Irwin, Scott H., 2003. "Understanding USDA Corn and Soybean Production Forecasts: An Overview of Methods, Performance and Market Impacts," AgMAS Project Research Reports 37496, University of Illinois at Urbana-Champaign, Department of Agricultural and Consumer Economics.
    • Handle: RePEc:ags:uiucrr:37496
    DOI: 10.22004/ag.econ.37496
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    References listed on IDEAS

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    1. Irwin, Scott H. & Good, Darrel L. & Gomez, Jennifer K., 2001. "The Value Of Usda Outlook Information: An Investigation Using Event Study Analysis," 2001 Conference, April 23-24, 2001, St. Louis, Missouri 18948, NCR-134 Conference on Applied Commodity Price Analysis, Forecasting, and Market Risk Management.
    2. Olga Isengildina & Scott H. Irwin & Darrel L. Good, 2006. "Are Revisions to USDA Crop Production Forecasts Smoothed?," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 88(4), pages 1091-1104.
    3. Garcia, Philip & Irwin, Scott H. & Leuthold, Raymond M. & Yang, Li, 1997. "The value of public information in commodity futures markets," Journal of Economic Behavior & Organization, Elsevier, vol. 32(4), pages 559-570, April.
    4. T. Randall Fortenbery & Daniel A. Sumner, 1993. "The effects of USDA reports in futures and options markets," Journal of Futures Markets, John Wiley & Sons, Ltd., vol. 13(2), pages 157-173, April.
    5. Bruce L. Gardner, 1992. "How the Data We Make Can Unmake Us: Annals of Factology," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 74(5), pages 1066-1075.
    6. Egelkraut, Thorsten M. & Garcia, Philip & Irwin, Scott H. & Good, Darrel L., 2002. "An Evaluation Of Crop Forecast Accuracy For Corn And Soybeans: Usda And Private Information Services," 2002 Conference, April 22-23, 2002, St. Louis, Missouri 19068, NCR-134 Conference on Applied Commodity Price Analysis, Forecasting, and Market Risk Management.
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    Cited by:

    1. Good, Darrel L. & Irwin, Scott H., 2006. "Understanding USDA Corn and Soybean Production Forecasts: Methods, Performance and Market Impacts over 1970 - 2005," AgMAS Project Research Reports 37514, University of Illinois at Urbana-Champaign, Department of Agricultural and Consumer Economics.
    2. Good, Darrel L. & Irwin, Scott H., 2005. "Understanding USDA Corn and Soybean Production Forecasts: Methods, Performance and Market Impacts over 1970 - 2004," AgMAS Project Research Reports 14785, University of Illinois at Urbana-Champaign, Department of Agricultural and Consumer Economics.
    3. Good, Darrel L. & Irwin, Scott H., 2011. "USDA Corn and Soybean Acreage Estimates and Yield Forecasts: Dispelling Myths and Misunderstandings," Marketing and Outlook Briefs 183528, University of Illinois at Urbana-Champaign, Department of Agricultural and Consumer Economics.

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