The U.S. Department of Agriculture’s cancellation of the Jan. 11 annual crop production summary, quarterly grain stocks, winter wheat seedings and agricultural supply and demand estimates reports no doubt provided a wide range of reactions.
“The market is starved for information right now,” said Rich Nelson, Allendale chief strategist.
I’m certain, based on some colorful phone calls in the past; some celebrated the postponed USDA reports. That group doesn’t buy-in to any of the numbers, particularly when it comes to state yield averages.
I get that, as well. USDA has Illinois’ average corn yield at a record 210 bushels per acre.
That’s about 45 bushels an acre better than what my wife’s families’ farm did this year, thanks to no rain over about a month when the corn needed it the most. Now, even if the rain was perfect, this isn’t your prime farmland and 180 bushels per acre would make everyone happy.
However, the reality is 210 is an average for this large, geographically-diverse state, and it’s all part of the bigger picture of the global commodity complex.
The bottom line is crop production stopped being strictly local in the mid- to late-1800s with the introduction of rail and water transportation and turned global about 100 years ago.
So, production needs to be looked at as a whole and plugged in with the demand side as a gauge that is as close to reality as possible with so many moving pieces.
But while there’s mixed reaction to the reports’ delays, a deeper look indicates it may be impacting farmers from another angle.
An Associated Press story authored by Scott McFetridge provided another perspective on the postponed reports that might mean it is costing farmers money.
“The delayed crop reports is leaving investors and farmers without vital information during an already tumultuous time for agricultural markets,” McFetridge wrote.
“The longer it goes on, the more distorted our reference points get. It’s a lot of guesswork,” said grain market analyst Todd Hultman, of Omaha, Nebraska-based agriculture market data provider DTN.
Todd Hubbs, University of Illinois agricultural economist, said he finds the report delays especially frustrating because he thinks they could confirm a belief that the U.S. soybean crop was smaller than earlier forecast.
If true, that information would mean a smaller supply and could raise soybean prices, helping farmers who have struggled with low prices worsened by the trade dispute with China.
Until the USDA releases its information, investors and farmers can’t be certain about where they stand, Hubbs said.
“Those kinds of numbers are fundamental,” he said. “When the USDA produces the numbers, they are the numbers. They move markets.”