Wednesday morning, my friend and MarketWatch Markets/Commodities report Myra Saefong sent me an email asking for my thoughts on the news USDA/NASS was cancelling some of its reports due to “appropriated budget levels”. At the top of the list was the July Cattle report, but also included the Cotton Objective Yield Survey and County Estimates for Crops and Livestock. I’ve worked with Myra for many years and she knows me well[i], so I’m sure she had fully anticipated my reply that began with, “I’m probably the wrong person to ask about this, as I think nearly all government reports should be cancelled”. I waited until the end of the day to put together my thoughts, I’d say coherently but we all know better than that, and sent them off to Myra. She responded immediately, as good reporters do, telling me she had to run with her story early. I worked in a newsroom long enough to know she was likely on a tight deadline, but then again, as my previous editors will confirm deadlines and I didn’t always see eye to eye.
Therefore, my comments did not make it into Myra’s piece, and understandably so. Given that, and with the next round of monthly USDA supply and demand tripe set for release at noon (ET) Thursday, I’ll share with you the answers I cobbled together for my friend but was too late sending off. Again, these will not surprise anyone who has read anything I’ve written over the past 30-odd years.
Q: Is this worrisome for the cattle/agriculture industry?
A: It shouldn’t be, but there is already squawking from folks about some of their government gruel being taken away. A friend in the cattle industry told me there is already a grassroots petition circulating to keep these reports from being “discontinued” (official wording from NASS). I’m sure these reports are expensive to produce and maintain, even if the information is less than reliable. Is this concerning? No more so than the razor’s edge the US government always seems to be running on when it comes to its budget. I can’t imagine these cuts making a big difference, but nevertheless, it is a step in the right direction.
Q: Are these reports particularly significant?
A: Not at all. The reality is USDA/NASS could’ve dropped them without announcing it and few would’ve noticed.
Q: Which of these cancellations and changes do you expect to impact the market the most?
A: None of them.
I concluded my email with a couple anecdotes, both you’ve likely heard and or read from me over the years:
- A few years ago, during one of the countless US government shutdowns, USDA was not able to release its monthly grain Supply and Demand reports. Despite all the wailing, hand wringing, gnashing of teeth, and rending of garments from those in ag media and brokerage industries, the world kept turning. Markets did just fine.
- Also a number of years ago, at one of its users’ meetings in Kansas City, a spokesperson for NASS was asked about its asinine weekly crop progress and condition reports. The response was, as reported at the time, “We know there are problems with these reports, but we will continue to release them because they are popular”.
As I told Myra, these reports are not about transparency, or leveling the playing field. They are about creating trade volume and feeding the industry numbers that are popular, even if completely misleading. That’s why I have no problem with this initial list of cancellations and for more of the same to come.
I’ve said something similar so many times over the years I can’t help but think it has been nothing more than yelling into the wind, but here I go again. If we want to understand a market’s real fundamentals, any market’s real fundamentals, all we have to do is look at that market itself. I recently wrote about what cattle markets were showing us. I didn’t draw conclusions from USDA reports but rather basis, futures spreads, and a look back at similar patterns in history. As for today’s expected guesses in grains, I’ve already posted what the various National Cash Indexes (ICY00) were showing us about available stocks-to-use at the end of March and how real supply and demand had changed from the previous month and previous year.
Q (mine): If we have all this real information in front of us, why do we need the imaginary version?
A: Because most folks don’t understand how to read real market information. It’s so much easier to regurgitate the imaginary kind.
I want to close with something Angie Setzer, the Goddess of Grain herself, said about these report cancellations. “I’m gonna need you to tell me all the ways you’ve used the reports NASS says they’re cancelling if you’re gonna want me to get mad about it.”
As usual, Angie was spot-on.
[i] This brings to mind another long-time friend in the ag media industry, Michelle Rook. Michelle also knows what my answers will be before she even asks the questions. Still, she is kind enough to have me as a guest on her Markets Now segments most every week. Except for those that include USDA reports, sometimes. You can read recaps of our discussion here on Barchart (example).
On the date of publication, Darin Newsom did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
