USDA Misleading Investors To Hide Looming Food Shortage

[link to www.marketskeptics.com]
Wednesday, June 17, 2009
by Eric deCarbonnel

The Weekly Times Now reports that world wheat stocks 'to increase'.

(emphasis mine) [my comment]

World wheat stocks 'to increase' [This title is intentionally misleading]
Staff writer
June 12, 2009

US and world wheat ending stocks are expected to increase in 2009/10, despite an assumed reduction in production, the US Department of Agriculture says.

[
1) wheat ending stocks are NOT expected to increase in 2009/10 by anyone who has a clue what is going on in agriculture today.

2) “assumed reduction in production”? Try GUARRANTEED reduction in production.

3) This entire article is a desperate/dishonest attempt to portray bullish fundamental (looming food shortage) as bearish.
]

This view contrasts to its projections for 09/10 coarse grain and cotton ending stocks which are expected to fall, the latest CBA Agri Insights reports.

World wheat production in 09/10 will decline from the record harvest posted last year. The USDA now expects that production in this season will reach 656.1 million tonnes (mt), 26mt or 3.8pct below the 08/09 crop. [Way too optimistic]

However, the 09/10 crop will still be the second largest crop in history. [Impossible]

The USDA’s latest estimate of 09/10 crop also represents a 1.6mt reduction from their prior estimate which was released in May. Wheat production estimates where revised lower for:

• European Union (-2.3mt) as result of lower yields in Hungary, Romania and Spain due to dryness.
• Canada (-1mt) due to dry conditions in Alberta and Saskatchewan and cold conditions that delayed spring wheat plantings.
• Ukraine (-1mt) due to dry conditions in April and May which cut yield potentials.

However, crop potentials for 09/10 were revised higher for Russia (+1mt, due to an expected larger area and improved spring wheat crop prospects) and China (+0.5mt, due to a larger area).

World wheat consumption estimates have been revised lower by nearly 1mt to 641mt, mainly due to reduced wheat feeding in Ukraine and the United States, and lower food use in Russia.

But despite the downward revision, consumption in 09/10 will be a new record at 8mt more than 08/09 levels and 25mt more than 07/08 levels.

Global wheat ending stocks for 09/10 were unexpectedly revised higher by 750kt to 182.7mt, the highest level for many years and well beyond the lows of 120mt in 07/08.

Higher carry-in stocks and lower consumption estimates were the primary factors contributing to the higher stock levels.

World wheat stock to use ratios are expected to climb to a comfortable 28.5pct in 09/10 [This is clear manipulation of data to suppress grain prices. It is propaganda], which is up slightly from the prior estimate and significantly higher than actual the 19pct lows in 07/08.


So the top importing nations are seen using 4 MMT less in 2009/10, well that's handy, if they were planning on buying it from Argentina, they'll probably find that it isn't available anyway!

So where's the rest of the production shortfall coming from, how are we going to feed the world? Global stocks of course. So with global wheat stocks having been in steady decline since 1998/99, we've had one decent harvest to help replenish them before we start digging into them again.

And what happens if Australia have another El Nino drought year? [This is happening. See below] That could wipe another 10 MMT off world supply quite easily.

We do like to live on the edge don't we?

See related articles/charts at posted link...

My reaction: USDA is manipulating data in every way to hide the coming food catastrophe.

1) The USDA is predicting wheat ending stocks to increase in 2009/10 and expects world wheat stock to use ratios are expected to climb to a comfortable 28.5pct.

2) The USDA now expects that production to be down ONLY 3.8 percent.

3) The media is filled with bearish stories despite the bullish fundamentals: the US will not run out of beans everybody keeps re-assuring us, prices will ration demand, China have more than enough and will go away etc.

4) The USDA is predicting 33% increase in Argentina's wheat crop despite planted acreage being down almost 40%.

5) The USDA estimate for the Canada’s 2009 canola crop is not low enough, considering how crop development has been delayed by severe cold and is now being threatened by drought.

6) Due to USDA misleading data and propaganda, the wheat market has tumbled in the past few weeks.

7) Argentine farmers will plant just 2.8 million hectares of wheat this season, a gigantic 39% drop on last year.

8) Argentine, once the world's fifth largest wheat exporter just a couple of years ago, won't even be self-sufficient in wheat in 2009/10.

9) Spanish grain harvest to be "at least" a third lower than last season's bumper 23.2 MMT, with final production could come in as low as 13.5 MMT (a 42% decrease).

10) Last year, when the September soybean contract closed more than four limits up on the last day of trade, the physical ending stocks for soybeans were more than double then what they are projected to be this year. This is evidence of the USDA overstating inventory levels.

11) Australian farmers have been warned that a powerful drought-inducing El Nino is on its way. The El Nino event will wipe out southeast Australian farmers' hopes of good winter and spring rain, and Australia's drought would continue for the next six months.


Conclusion: Given how starkly USDA estimates contrast with reality, there is no way the flaw data being released is an innocent mistake. The USDA is deliberately misleading investors about the true state of the world’s food supplies. However, no matter how much the USDA tries to hide it and wish it away, the world is headed for a catastrophic fall in food production in 2009.


A trip to the posted link offers plenty of articles (all on the posted page) that beef up this guy's contention.