Understanding Usda Corn and Soybean Production Forecasts: Methods, Performance and Market Impacts Over 1970-2005

AgMAS Project Research Report No. 2006-01

51 Pages Posted: 20 Apr 2006

See all articles by Darrel L. Good

Darrel L. Good

University of Illinois at Urbana-Champaign - Department of Agricultural and Consumer Economics

Scott H. Irwin

University of Illinois at Urbana-Champaign

Date Written: February 2006

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. Month-to-month changes in corn and soybean production forecasts from 1970 through 2005 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 1970-2005, with the exception of August forecasts since the mid-1980s. The forecasting comparisons for soybeans were somewhat sensitive to the measure of forecast accuracy considered. One measure showed that private market forecasts were more accurate than USDA forecasts for August regardless of the time period considered. Another measure showed just the opposite. As the growing season progresses the difference in the results across the two measures of forecast accuracy diminished, with USDA forecast errors in soybeans about equal to or smaller than private market errors. 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. Similar to corn, USDA soybean production forecasts had the largest impact on soybean futures prices in August with recent price reactions appearing somewhat larger than in the past. Overall, the analysis suggests that over the long-run the USDA performs reasonably well in generating crop production forecasts for corn and soybeans.

Keywords: Corn, Soybeans, forecast, production, USDA

JEL Classification: Q10, Q11, Q13

Suggested Citation

Good, Darrel L. and Irwin, Scott, Understanding Usda Corn and Soybean Production Forecasts: Methods, Performance and Market Impacts Over 1970-2005 (February 2006). AgMAS Project Research Report No. 2006-01, Available at SSRN: https://ssrn.com/abstract=897279 or http://dx.doi.org/10.2139/ssrn.897279

Darrel L. Good (Contact Author)

University of Illinois at Urbana-Champaign - Department of Agricultural and Consumer Economics ( email )

1301 W. Gregory Drive
326 Mumford Hall, MC-710
Urbana, IL 61801
United States

Scott Irwin

University of Illinois at Urbana-Champaign ( email )

344 Mumford Hall
1301 W. Gregory Dr.
Urbana, IL 61801
United States
217-333-6087 (Phone)

HOME PAGE: http://https://scotthirwin.com/

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
226
Abstract Views
1,491
rank
152,636
PlumX Metrics