We’re entering the most critical time of the year for you as a grain farmer – generally, the time of maximum uncertainty in the market. What yield will you and every other farmer get for your crop, and how does your bottom line compare to last year? How will demand for your crops fluctuate? Will the weather favor you and your fellow farmers?  Just as you make decisions in uncertainty, so does the USDA. Initial, models-based estimates of yields influence the prices and farm income like a shockwave. As the corn season matures, so does the quality of the estimates, as the USDA turns from pure modeling to boots-on-the-ground data to generate its important monthly WASDE report.

 

Does this mean that the USDA data early in the season – like now – is garbage? No – USDA modeling has proved beneficial and directionally accurate in giving you and other buyers and sellers intelligence about decisions you need to make now. Nonetheless, always remember that prices early in the market are an indicator of the sentiment of the market based on where models (and people) think the market might perform vs. hard data using actual results.

 

Let’s be clear – it is critical for you to be on top of how the USDA’s estimates move as they turn from speculation to fact. Check out the seasonal chart below. It’s no coincidence that prices tend to be at their highest during the highest uncertainty. After all, the greater the risk, the greater the potential reward (or loss). As the USDA accumulates and utilizes more data, the markets become more certain along with those higher prices, generally speaking. Thus, it is imperative that you understand the methodologies behind the underlying estimates as the summer progresses, to prepare yourself to take action if and when opportunities arise.

 

 

 

 

 

 

USDA Corn Yield Estimates: Constructing the Basic Building Blocks

 

The USDA looks to two branches within its organization to build models and to acquire data in order to create the estimates and data you use from the monthly WASDE report.

 

• The World Agricultural Outlook Board (WAOB) is the forecasting and policy arm of the USDA and is primarily responsible for WASDE report generation overall, in addition to the forecasting content for the May-July WASDE reports. Initially in the season, it relies on crop weather models, historical trends, and subjective judgment. Deeper into the summer, it increasingly incorporates surveyed and observed planting, yield, and weather data into its forecasts and reporting.
• The National Agricultural Statistics Service (NASS) produces farmer surveys and direct observations used by the WAOB, as well as for its own statistically robust estimates in its Crop Production reports used in the August-April WASDE reports. Ultimately, the accuracy of farm data belongs to this branch.

 

Because the WASDE reports from May-July are only based on WAOB modeling, they drive speculation as to what the market will do and we’d expect those reports to generate more volatility. After all, people use that information to speculate where the market will go. Research by our own analytics team bears that out. Analyzing data from the past 25 years shows that the June WASDE report ranks as the second most volatile USDA report in terms of same-day market reaction. Additionally, it holds the top spot for driving market volatility over the two weeks following its release, underscoring its lasting impact on price direction. As data firms up after July, so too does price.

 

 

 

Key Considerations as You Evaluate the Impact of WASDE on the Market

 

Without question, you need to understand the big picture behind WASDE reporting, especially because of the significant market impact of the reports in June, July, and August on your potential bottom line. The table below outlines the foundational information that drives WASDE content (that is, model-driven vs. current data-driven). Here are a few things you’ll note and need to keep in mind as you review how the reports are generated:

 

• The June and July WASDE reports are based solely on models, trends, and analyst judgment. As a result, they are more subjective in nature. In later reports, the WAOB relies increasingly more on actual data and accordingly less on modeling to create their monthly estimates. As a result, the information in the August and September reports is increasingly precise, and the most accurate data and reporting is available in November.
• WAOB’s early “normal” weather assumptions may overestimate yield. This is compounded by the fact that July precipitation alone is critical in the July report, whereas later months reflect cumulative impacts.
• The market as a whole suffers from the lack of clarity around the WAOB methodology, as well as understanding the transition from WAOB-driven reporting to the NASS-driven in August. These factor in market confusion and how the market may react to reporting.
• The WASDE reporting is focused on the macro picture for agriculture. As a result, national estimates mask regional differences.

 

 

 

 

In a volatile market, knowledge is power – and timing can mean everything.

 

June and July USDA reports are among the most volatile of the year because they blend historic trends, weather models, and educated guesses. August through November reports shift to survey-driven precision, making it easier to trust the numbers. By then, many marketing opportunities may have passed.

 

That’s why you need Total Farm Marketing in your corner.

 

Our analytics team doesn’t just track the data — we decode it. We help you anticipate moves, understand the models, and position your marketing strategy before the rest of the market catches up. Turn uncertainty into opportunity. Tap into a partner that understands the nuances behind the reports — and leverage them.

 

 

 

Work with Total Farm Marketing today — and take control of your marketing strategy this USDA season. Call us today at 800.334.9779.

 

This year, Total Farm Marketing is celebrating our 40th year helping farmers.

 

 

References:

For detailed methodology, refer to USDA’s Crop Production and WASDE reports at nass.usda.gov and www.usda.gov. See also:  https://www.nass.usda.gov/Newsroom/Executive_Briefings/ and https://www.usda.gov/world-agricultural-outlook-board

 

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