USDA Data Vacuum Spurs Agricultural Uncertainty

Published online: Oct 13, 2013 John Seasley, USDA
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Without up-to-date federal crops and livestock data, agricultural commodities markets are threatened by increasing uncertainty, analysts say.

Traders in the grain and livestock markets - as well as farmers and agricultural companies - rely especially heavily on two U.S. Department of Agriculture reports that were scheduled for release Friday before the partial government shutdown forced their cancellation.

The World Agricultural Supply and Demand Estimates and the U.S. Crop Production reports impact commodity prices and give reliable figures on global demand and harvest estimates.

The USDA has not released a report since the federal government shutdown began Oct. 1. USDA spokeswoman Courtney Rowe said the lack of reports has been "due to the lapse in federal funding." The same reason is given on the USDA website, which is down. 

Of all monthly crop reports, the October release carries a special significance, said Dan Cekander, director of grain market analysis for Newedge USA LLC in Chicago

"The reason is, by this report, there's usually enough harvest (data) that the USDA can `true up' their yield numbers," Cekander said.

Without the USDA reports, he said, "It's just a big guessing game on what the yields are."

Rich Nelson, chief strategist at Allendale Inc. in McHenry, Ill., said that the uncertainty of market information has influenced clients' willingness to take risks. 

"It is clear that this government shutdown has impacted our business," he said.

The extent of that impact on the markets is yet to be determined. Chicago-based CME Group has notified customers that lean hog contract settlements for October futures and options contracts could be affected by the shutdown. The procedure for settling certain contracts would be modified to accommodate the lack of government data. 

The longer the shutdown continues, the greater the uncertainty.

"I think eventually it would subdue the trade and cause some to go to the sidelines if this happened to be extended," Cekander said. 

Still, there are reasons for optimism about this year's harvest. According to the USDA's Sept. 29 crop progress report, 55 percent of U.S. corn was in good or excellent condition, compared to 25 percent a year ago. Fifty-three percent of soybeans were in good or excellent condition, compared to 35 percent a year ago.

The last government crop report released Sept. 12 estimated a record corn crop of 13.8 billion bushels this year, up 28 percent from 2012's drought-reduced harvest of 10.8 billion bushels. The prospect of surpassing 2009's record corn crop of 13.1 billion bushels has weighed on prices. 

Corn futures prices have fallen 30 percent to $4.38¼ per bushel at Thursday's close from $6.30½ per bushel a year ago. 

The U.S. will produce an estimated 3.15 billion bushels of soybeans this year, up 5 percent from 2012's 3.01 billion bushels, according to the Sept. 12 report. Soybean futures prices have fallen 4 percent to $12.88 per bushel at Thursday's close from $13.35¼ per bushel a year ago.

Overall yield reports appear to be favorable, Cekander said, and some analysts predict even higher numbers than the USDA's September estimates. Without new data, it's hard to make an informed decision.

"The corn and bean yields are going to get larger, that's the widespread expectation," Cekander said. "But again, if that's correct, you know, how much?"