- The most irresponsible of all USDA-related reports are NASS' weekly crop progress/condition updates.
- To begin with, nobody has an answer for the question, “Percent of what?”, when it comes to progress.
- As for conditions, The Browning Effect that has been evident for decades makes crop condition updates null and void.
Sigh…
As usual, this is not a piece I wanted to write, but the subject continues to come up. I know there are new readers to Barchart every year, and I get interview requests from folks I haven’t talked to in the past. Given that, it’s time to address one of the subjects I hate most: NASS’ weekly crop progress/condition numbers released each Monday afternoon. I have so many stories, studies, and examples of stupidity tied to these things that they all start to blend together over the years. I’ve railed against these completely made-up numbers until I’m blue in the face, yet they are all anyone wants to talk about. So, let’s dive into it. Again.
Story #1: A long time ago in a galaxy far, far away I made the rounds of seasonal Farm Shows talking about markets. At one particular show held every August, fate lined up so I usually followed another “analyst” who never met a USDA report he didn’t like, regurgitating a seemingly endless string of imaginary numbers and calling it a presentation. As was often the case, this show was deluged by rain, and as I was making my way back to home base, the local USDA agents invited me in to get out of the passing storm. They knew me, or I should say my reputation proceeded me, and they opened up about the process behind turning in weekly crop progress/condition reports. Friday afternoon, before everyone heads home for the weekend, they pull the previous week’s numbers, debate what happened with weather that week, change a couple numbers accordingly, and send it in. That’s as scientific as it gets.
Story #2: Also many years ago, I had just finished a radio interview with my friends at WIBW (Topeka, Kansas). After hanging up and grabbing another cup of coffee, I received an email from the host of the talk show. He wanted to know if one of the listeners could call and visit about what our topic of the day had been: The latest NASS update. It was fine with me. After all, what was one more conversation about the world of make-believe. The gentleman called, and it just so happened he was recently retired from the agency that puts the weekly silliness together. I don’t remember every word of our conversation, and much of it was off the record, but the one thing he said that still sticks in my mind was, “Your comments about the ‘science’ behind the reports was absolutely correct”. So I have that going for me. Which is nice.
Story #3: A few more years down the road and my constant tilting at windmills had come to the attention of some of the higher-ups at NASS. So much so a delegation of state and national officials stopped by the newsroom to discuss the matter. I approached it as a legal briefing, so carried with me the charts showing The Browning Effect for the different crops. What’s the Browning Effect? If you look at what NASS’ crop conditions do over time, you see the trend is for the numbers to decrease as the crop turns brown. In other words, as it matures naturally it doesn’t look as healthy as it does when it’s young and green. I wish I was kidding, but I’m not. After showing the delegation these charts, the response was, “We aren’t the ones who tell people these reports are important”. And with that, the meeting came to an end.
Story #4: Along that same line of importance, at one of the User Meetings, the official social media account was posting comments made during one of the discussion sessions. One post will always stay with me, “We know there are problems with these reports, but we will continue to release them because they are popular”. Think about that for a moment. The agency was admitting flaws with the system, calling into question any perceived value, but because they are “popular” the reports will continue to be released. As I’ve said countless times, this set of NASS nonsense is the Kardashians of USDA reports.
What can we do about the situation?
- When we see folks blindly quoting planting progress (or whatever number) as X%, ask them “Of what?” How do you have a percent of something when you don’t know what that something is? Oddly enough, nobody has ever answered that question when I’ve posed it to them.
- When we see, hear, or read a reporter/analyst/commentator start quoting this nonsense, turn them off. Or follow someone else. Get your ag-related news from a group that doesn’t start every piece with, “The market did this because USDA said that…”. It’s difficult, but I know of some out there.
- If your broker/adviser happens to be one who has taken a public stance by saying, “I’m a big fan of NASS’ weekly reports…”, you might want to find someone else as well. The bottom line is if someone you trust with your money and positions is promoting completely made up numbers, it isn’t good.
I know one of the responses will be, “But traders trade these numbers!” No they don’t. I have talked to a number of investment firms, algorithm coders, and so on in the industry and not one single time have I been told they even look at NASS’ numbers. On the other hand, as the years have gone by I’ve heard more discussion, and received more questions from those same groups, on how to read national cash indexes (ICY00), basis markets, and futures spreads to better understand real market fundamentals.
But few in agriculture care about those things. Not while they can keep up with those who are keeping up with the Kardashians.
On the date of publication, Darin Newsom did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
