- It is an absolute wast of time to talk about NASS' weekly imaginary crop condition numbers, but here I am again with another discussion of the Browning Effect.
- The Browning Effect shows us NASS' numbers go down as the crop, any crop, matures and turns brown, with corn in the spotlight in early August.
- We see this in good years and bad, sometimes with crops that reportedly have record high yield posting some of the lowest crop condition numbers.
Is this what I wanted to talk about Tuesday morning? No. But it is my understanding there is a great hue and cry over NASS ‘ weekly imaginary crop condition numbers. Additionally, it was brought to my attention next week should see an even LARGER drop in these fictitious numbers. My response? Of course they will. After all, it is August, the corn crop is maturing meaning it is turning brown, bringing into play one of my most famous set of studies – (cue dramatic music) The Browning Effect.
Those of you who have been with me over the years are familiar with this subject and the legendary stories attached to it. For those of you relatively new to my analysis, and since I only talk about it once a year, the Browning Effect is the tendency for NASS’ weekly crop condition ratings, yes those numbers the agency makes up every week, to go down as the crop, any crop, matures and turn brown. Why? Well, the crop isn’t green anymore so it must be in poorer condition, right? Again, back when I was required to talk about this nonsense I tracked all the numbers for the various crops, and they all showed the same pattern regardless of timeframe. What made it even more fun was some of the crop years when NASS’ numbers fell the most, USDA would eventually estimate yield to be the largest.
One day, back in my previous life, some NASS bigwigs came to visit. We had a meeting in the Editor-in-Chief’s office, and I showed them my work. The folks from NASS weren’t happy, with the only comment from them I remember being, “We aren’t the ones who say these reports are important, that’s everyone else.” A number of years later I was reading a recap of a NASS user meeting in Kansas City when the question of crop condition reports came up. The response is burned in my brain, “We know these reports have problems, but we will continue to do them because they are popular.” From that point on I started calling them the Kardashian of USDA reports. Speaking of which, USDA doesn’t even use NASS’ numbers when making its own guesses on yield, speaking volumes about their worth.
But let’s talk about corn (ZCZ22) again this year, shall we. My imaginary index uses all 5 categories rather than just good and excellent (I guess most folks can only handle two numbers). I then average the previous 5-years (red line) and 10-years (blue line) to show the seasonal pattern, and lo and behold, looks what jumps out. NASS’ crop conditions go down as the crop turns brown. Sure, some years are worse than others, highlighted by the sharp drop in the 2022 numbers (brown line). I hear the skeptics, I’ve always heard the skeptics, as well as the “analysts” who proclaim on national television to be “big fans of NASS’ reports. To them I say a lot of things, most of it can’t be printed, but also to take a look at the 2021 (gold line) and 2019 (purple line) numbers.
Why these two crop years? These are the most recent extremes, based on USDA’s always questionable final yield estimates. Recall last year’s crop reportedly came in at a record high 177 bpa, yet crop conditions ran below the 5-year average as the crop matured. Two years prior, the 2019 crop struggled and reportedly finished with a yield of 167.5 bpa. Yet you’ll notice late in the reporting season 2019 crop conditions were actually better than 2021’s for the same week.
I’m not going to tell you can’t live and die by NASS’ made-up condition numbers. If that’s what you want to do, so be it. What I am telling you is to be aware of just how bad these numbers are, so bad they aren’t even good enough for USDA to use.
And now, we put the subject away until next year.
More Grain News from Barchart
/Super%20Micro%20Computer%20Inc%20logo%20on%20building-by%20Poetra_RH%20via%20Shutterstock.jpg)
