This article is from: srnnews.com
By Tom Polansek
CHICAGO, Oct 9 (Reuters) – The US Department of Agriculture on Friday is expected to lower its estimate of how much of last year’s corn harvest was fed to livestock after it reported a bigger-than-anticipated jump in grain stocks last week, analysts said.
Farmers and crop handlers had more than 2 billion bushels in storage at the start of last month, up 35% from a year earlier and 9% above analysts’ estimates, according to quarterly data USDA released on September 30.
Analysts and economists said the data led them to believe that USDA previously overstated how much corn was being used for feed, a key metric of demand. The report renewed questions over the reliability of USDA crop estimates after a string of data missteps by the agency, long viewed as the gold standard of global agricultural market information, they said.
“They finally came clean, in my opinion,” said Jim McCormick, co-founder of brokerage AgMarket.Net.
“I’ve been arguing for six months that feed and residual number was too high. They finally got the clarity.”
USDA has no direct measure of feed use. Rather, it estimates how much corn was fed to livestock in a category that also includes residual uses, such as wasted grain, after accounting for supplies that are exported and manufactured into ethanol.
Analysts have questioned USDA’s estimate of a 17% increase in feed use ahead of the autumn harvest, compared to the previous year. The nation’s cattle herd was at a 75-year low, leaving fewer mouths to feed, and analysts said that raising heavier animals would not boost demand as much as USDA was projecting.
“Back in the summer, I spent way too much time going down this rabbit hole to figure out what they were doing,” said Mike Castle, senior commodities economist for consultancy StoneX. “There wasn’t really a good explanation.”
USDA in July raised its estimate of how much corn would be fed to livestock, following a record harvest in 2025. Since then, it has estimated in monthly reports that 6.35 billion bushels of corn would be used for feed and residual purposes in the 2025/26 crop year that ended on August 31. This was up from 5.49 billion bushels in 2022/23; 5.83 billion in 2023/24; and 5.44 billion in 2024/25.
“It has looked like this just insane outlier the entire time,” Castle said.
Using less corn for feed can add to grain stocks.
In a monthly report on Friday, USDA is expected to raise its estimate of how much corn will be in storage next September by 7% from last month to 1.67 billion bushels, according to a Reuters survey of analysts.
USDA said it updates estimates for feed and residual use when stocks and other information become available and that it conducted extensive surveys of farmers and commercial grain storage facilities to gather quarterly stocks data.
“A forecast that needs updating does not, by itself, show an unusual problem with forecasting or data collection,” the agency said.
SEPTEMBER SURPRISES
USDA has a long history of surprising analysts with September data and last year reported corn stocks were about 15% higher than they expected.
The agency’s crop data came under scrutiny after it made record-large revisions to its corn acreage estimates last year, following deep staff losses. Reuters has also found that USDA figures may understate total US farm debt.
USDA is seeking to improve crop estimates after farmers’ response rates to agency surveys have generally declined in recent decades, hurting confidence in its data. Surveys remain the best source of data for grain stocks, USDA said.
“It looks like obviously old-crop feed and residual usage was overstated,” said Doug Houghton, analyst at Brock Associates. “The previous stocks estimates had supported that high feed and residual.”
(Reporting by Tom Polansek; Editing by Cynthia Osterman)
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