Three market experts weigh in on how the absence of today’s canceled USDA reports will affect grain prices.
The market was predicting Oct. 11 to be a market-moving day. USDA’s monthly Crop Production and World Agricultural Supply and Demand Estimates reports were scheduled for an 11 a.m. release. But, due to the government shutdown, that won’t happen.
How will this situation affect the grain markets?
"The informational void created by USDA not releasing the October WASDE and Crop Production reports is not inconsequential," says Greg Wagner, president of GWX – Ag Advisors. "However, since USDA saw fit to properly communicate the non-release of the reports in a timely fashion, the trade has been able to mitigate the impact. The trade has been hobbled, but not fully incapacitated, in the absence of the steady stream of market data from the USDA."
Joe Vaclavik, president of Standard Grain, agrees that the grain markets will be affected by this lack of information. "The trade relies on objective data from the USDA," he says. "Everyone involved, whether it be a farmer, trader, merchandizer, cattle feeder, etc., uses this information to make decisions."
Since the government shutdown began, Vaclavik says, the markets have been quiet. "This lack of information and uncertainty is bad for the grain business," he says. "People often criticize the USDA and their information, but we can all agree that their data is the benchmark. An uninformed market is an ineffective market."
Ted Seifried, Zaner Ag Hedge Group vice president, says that missing the October USDA report is a big loss for the grains markets. "This report was to be the first field-based report of the year from USDA, rather than the statistical based reports we have seen so far," he says.
Seifried says the last few months have raised a lot of questions about the quality and yield potential of the corn and soybean crops. "Frankly, it has been a very strange year weather-wise and markets are unsure what the effects of the cold and wet spring, warmer June, near record cool July and hot, dry August had on crops," he says. "This report was supposed to lend some answers, which we will now have to wait for from the USDA."
Filling the Information Void
While USDA is closed, the market has found some other information sources.
Informa Economics released its estimates last week. Seifried says those numbers were closely watched and the market responded slightly bullish. Additionally, other analysts are putting out yield and production estimates.
Other, production clues are also available. "The grain markets have, from a fundamental standpoint, an exceptional stream of information feeding into the price discovery process via yield reports, basis levels, and futures price action," Wagner says. "These all are acceptable vehicles in which to gauge and formulate ongoing re-assessments of supply and demand expectations."