Todd's Take

By Todd Hultman

DTN Lead Analyst

In my profession, confirmation bias is a common psychological hazard to watch out for. Confirmation bias is the tendency to see the world the way we want it to be, rather than how it actually is. As humans, we tend to filter out information we don't want to hear and that leaves us vulnerable to the risk of fooling ourselves.

In the case of farmers, confirmation bias is often seen in early summer when crop estimates still take a large amount of guesswork. Farmers in general are prone to believe fewer acres were planted than actually were and that yields will turn out lower than they actually do.

Please understand I am not picking on farmers, but making the point that I understand the risk of only listening to those whose living is based on the price of corn. I try to stay aware of how stories can be skewed by the one telling the story, and I try to keep things in perspective with other things we might know.

I am saying all this because the past two weeks, I have had many opportunities to listen to farmers in eastern Nebraska, around Little Rock, Arkansas, and from several different parts of the central and eastern Midwest at DTN's Ag Summit in Chicago.

They are all asking me the same question: When will USDA account for the problems we are finding in the cornfields at harvest? They then proceed to tell me remarkably similar stories from all different parts of the Midwest: Corn yields are down, test weights are low, crops never made it to maturity and fields have been difficult to get into.

We would all expect to hear these problems from Dakota farmers who bore the brunt of adverse weather in 2019, starting with wet planting conditions and ending with October and November snowstorms.

However, I was surprised to hear from farmers at a meeting of Washington County Cattlemen in Blair, Nebraska, that yields were generally down 10% to 15% in the area. Keep in mind, except for areas near the swollen Missouri River, eastern Nebraska did not suffer the planting delays that much of the country did in 2019 and enjoyed the best weather conditions of the Corn Belt.

The real kicker was hearing that local corn bids were approaching even money and soybean bids were 25 cents below the futures board. Everyone I talked to said that they had never seen basis that narrow at harvest time.

I knew from DTN's map of cash corn bids that basis has been strong around Indiana for months, but it was still impressive to hear farmers from Indiana talk about current corn bids 40 cents above the board. Again, stories like these at harvest time are difficult for any defender of USDA's crop estimate to explain.

If there is one account that best summed up the situation in 2019, it came from a friend of DTN's that farms in southeastern Minnesota. DTN Senior Meteorologist Bryce Anderson explained Wednesday morning at DTN's Ag Summit that this farm had an excellent crop of 237 bushels per acre (bpa) for corn planted in April. Corn planted in June, however, yielded 162 bpa and tested at 50 pounds per bushel.

Many more stories like the ones above have been repeated several times the past two weeks and I couldn't help thinking about the Chico Marx quote: "Who are you going to believe, me or your own eyes?"

As I've explained before, I don't think USDA is intentionally trying to hold down the price of corn with its big 13.66 billion bushel (bb) crop estimate. I do believe their methods for estimating the 2019 crop are being exposed by the 15 million bushels (mb) of corn planted after the June survey was taken -- a situation none of us have ever faced before.

When will USDA account for what's happening in cornfields across the country? Surely, the Jan. 10 World Agricultural Supply and Demand Estimates (WASDE) reports will be too early this year to provide a final corn crop estimate, but it will be interesting to see if USDA gets enough information to acknowledge a smaller corn crop.

As many farmers have said to me, if the corn crop is so big, why is the basis so strong? That doesn't sound like confirmation bias to me. That sounds like good analysis that deserves a better answer. For all of our sakes, I hope USDA will be ready to provide one on Jan. 10.

Todd Hultman can be reached at todd.hultman@dtn.com

Follow him on Twitter @ToddHultman

(BE/CZ)

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