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North Central Ohio |
Subject: "The USDA is way too high on the corn crop in this big report coming on Thurs." (Respected analyst on CNBC this morning)
http://video.cnbc.com/gallery/?video=3000066432
Rick Santelli: Thursday, big USDA report. john mcintosh says the crop numbers for corn are wrong and corn prices could go up dramatically. take it away.
John McIntosh: In both the crop report and stock report on Thursday, I think both could be a surprise. Last fall, I collected with a colleague over 80,000 corn yields. This data suggests that the USDA is way too high on the crop. In Northern Iowa, for instance, we collected 18,000 corn yields from eight separate sources. not one of these sources suggested that the Iowa corn yield was higher than a year ago and yet the USDA is up six bushels. for the third time in eight year, we have a big discrepancy with the usda.
In 2003, our soybean yield was four bushels below. The USDA came down six. In September of 2010, our corn yield was ten bushels below the usda. They eventually came down ten. This year, they started off at 153 and came down to 147. We have consistently had a corn yield this year from 141 to 142. We cannot imagine the USDA will drop the corn yield five bushels in this report.
Rick Santelli: but you say they should.
John McIntosh: it will show up in the stocks.
Rick Santelli: how much corn do we use a month?
John McIntosh: a billion bushels.
Rick Santelli: what do you think the carry out -- how much will we are v. on hand after this report in your opinion?
John McIntosh: About none. zero. because i think they are off by 400 million bushels. they also counted old crop corn. and they had to lower the feeding number. so they compounded their error. and i believe we have 100 million bushel error becomes a 200 million error. if you look back at the meat production versus corn consumption for animals, you'll find they say we're producing 2% more meat using 14% less corn, all other variables taken into account including the byproduct of ethanol.
Rick Santelli: so if i'm a market guy, when i fill up, there's still a mandate for ethanol, so that price will get passed along. but if you're in the meat business, what do you do?
John McIntosh: you'll be in a tough situation. the bottom line, rick, we're flying behind. the pilot is drunk.
Rick Santelli: is $8 corn out of the question?
John McIntosh: if my numbers are right, it's in the cards. keep in mind, usdas has caused more volatility in the grain market in recent years than all the hedge funds and all the fat fingers combined.
Rick Santelli: wow, i'll tell you what, i can't wait until thursday morning. this guy has done his home work. back to you. sure sounds like it. appreciate that. thank you for bringing that to us.
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If this guy's right, I hope you have corn to sell!
