Commodity Markets

Why Sharp Traders Skip the USDA Noise

Most years, around this time, I like to quote President Abraham Lincoln from the proclamation that designated the last Thursday of November as a Day of Thanksgiving.

Whether or not there is much to be thankful for this year is a matter of debate for other places. For now, let’ s just leave it with what President Lincoln had to say back in 1863,“ The year that is drawing toward its close has been filled with the blessings of fruitful fields and healthful skies.”

The Problem With USDA“ Estimates”

How fruitful were U. S. fields this past year, thanks in part to favorable skies? Many in the industry rely on the U. S. Department of Agriculture’ s( USDA) World Agricultural Supply and Demand Estimates( WASDE) report for their sense of supply and demand.

I highlight the word“ Estimates” because that’ s exactly what these numbers are— estimates. A quick search brings up a few synonyms for that word:

• Approximate

• Guess

• Reckon

There’ s nothing absolute about the USDA’ s figures, yet U. S. agriculture has been conditioned by the broader industry to treat these reports as the beginning and end of supply and demand information.

I used to feel sorry for those folks, but the longer I do this the more I find their foolishness funny. As the late Charlie Munger said,“ It is remarkable how much long-term advantage people like us have gotten by trying to be consistently not stupid, instead of trying to be very intelligent.”

Intelligence Over Guesswork

This year, given the lack of stupidity from the USDA, my thought was that more attention would be put on an intelligent approach to understanding market fundamentals such as U. S. corn and soybean production and supplies as well as demand for U. S. commodities in general.

What I’ ve seen, though, is the opposite. The only increase I’ ve seen is the wailing, gnashing of teeth and rendering of garments as they wait for the USDA reports to return.

Reading the Truth in Futures Spreads

If we were to use intelligence rather than nonsense, what would that approach look like?

As usual, we can turn to futures spreads( price difference between futures contracts) for the information we need.

Let’ s start with corn. We know, again by studying the market’ s spread activity, that the U. S. planted more acres of corn this past spring. Those acres were harvested this fall, and while yield and production was good, it wasn’ t great. How do we know this?

From the last weekly close of March through the first weekly close of September, the December-March futures spread moved from covering 42 % calculated full commercial carry( total cost, storage and interest, of holding bushels in commercial storage) to 60 %.

The more calculated full commercial carry covered by a futures spread, the less bullish / more bearish the outlook of real market fundamentals. In this case, the fundamental view grew more bearish during the growing season, but never overwhelmingly so, an early indication the 2025 corn crop was

16 | 515-574-2206 | 515-574-2189 | November 2025