Can Private Forecasters Beat the USDA?

Can Private Forecasters Beat the USDA?

The accuracy of USDA forecasts relative to their private counterparts was explored by Egelkraut et al. (2003) and Isengildina-Massa, Karali, and Irwin (2020). Egelkraut et al. (2003) assessed the accuracy of USDA’s corn and soybean production forecasts relative to the private forecasts released by Conrad Leslie and Sparks Companies over 1971–2000 and found that the relative accuracy of USDA forecasts varied by crop and month. Their results suggest that USDA forecasts appeared more accurate than private forecasts of corn production, especially later in the forecasting cycle. For soybeans, private forecasts appeared more accurate than USDA’s in the beginning of the forecasting cycle (August and September), but USDA forecasts were dominant for October and November.

Isengildina-Massa, Karali, and Irwin (2020) evaluated the accuracy of USDA crop Acreage and Production forecasts relative to their private counterparts over 1970-2019. Their findings reveal that in the vast majority of cases, USDA forecasts are more accurate than their private counterparts. The accuracy domination of the USDA forecasts is most consistent in corn, largest in wheat, and least prevalent in soybeans. Specifically, they found consistent accuracy advantages of USDA in corn Prospective Plantings, Acreage, and October Crop Production forecasts throughout the study period. On the other hand, the only evidence of private forecasts dominating the USDA was found for August corn Production during 1990s and early 2000s. However, it appears that USDA has regained its advantage in August corn production forecasts since the mid-2000s.

To the best of our knowledge, the relative accuracy of the WASDE ending stocks forecasts has not been investigated in prior studies, likely because private expectations data for these forecasts is not available for a long time period.