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Flaws shake USDA’s authoritative crop report

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The U. S. government issued a first-of-its-kind correction last Tuesday to its monthly crop report, usually the authoritative word on U. S. farm output, that was flawed this month by bad data on corn and soybeans.

The U. S. Agriculture Department lowered its forecast for the corn crop by 1.4 per cent to 12.033 billion bushels, and for soybeans by 1.5 per cent to 2.938 billion bushels. They still would be the second-largest corn crop on record and the No. 4 soybean crop.

“I do not know of another time we have corrected a crop report,” said Agriculture Department official Carol House, who oversees the report, issued around the 10th of each month.

Compiled in secrecy, the crop data is the most important USDA report and, like unemployment and inflation estimates, is ranked by the government as a principal economic indicator.

The 1983 movie “Trading Places” used the crop report as a plot device in a comic scheme to corner the orange juice market amid a Darwinian experiment by two bickering traders.

“I don’t think it will cause a blow to the credibility of the (report),” said Agriculture Secretary Ed Schafer of the mid-month correction. “I see no reason to believe that this will be an ongoing occurrence.”

Other officials said spot checks indicated earlier forecasts were valid.

The harvest figures were lowered because plantings of corn, soybeans, sorghum, canola, sunflowers and dry edible beans were smaller than USDA reported on Oct. 10. Corn and soybean plantings were down by 1 million acres.

Some analysts were skeptical when the October report was released, saying USDA’s totals of land in major crops were too high. They said the corrections would drive up futures prices.

“I’ve been in this business since 1981 and I don’t remember them ever making a correction in the middle of the month like this,” said Jack Scoville of Price Futures Group Chicago.

Analyst Don Roose of U. S. Commodities called it “an unprecedented adjustment. The market balance tables are tighter than what we thought we were working with.”

With the revisions, USDA estimated there were 252.9 million acres of the eight major crops – wheat, soybeans, cotton, rice, corn, sorghum, barley and oats – about 1 million acres more than projected at the start of the year.

Thomas Hofeller of the Farm Services Agency said analysts found discrepancies between data in FSA computers and the material given to crop forecasters for the Oct. 10 report, apparently due to flaws in automated “scripts” that transfer data.

Asked if sabotage was involved, Hofeller said, “I’m sure that’s not what happened, absolutely.”

House said USDA would use a mainframe database in producing the November report and not the database called into question this month.

USDA notified the regulators of the U. S. futures and stock markets of the problem with the report issued on Oct. 10 and also notified USDA’s inspector general.

In a companion to the crop report, USDA said the smaller corn and soybean harvests would mean smaller exports of the crops and a smaller stockpile before the 2009 harvest – 1.088 billion bushels of corn and 205 million bushels of soybeans.

It raised its forecast for the average farm-gate price by 5 cents each, to $4.75 a bushel for corn and $10.45 a bushel for soybeans. Both would be record highs.

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