The Market's Fine Print
An Open Letter to NASS Statistics Division Director Kerestes
Dear Director Kerestes,
I'm sure you don't know me from a barrel full of variables and data points. Not to worry. Who could expect a busy man like yourself (no doubt up to his heinie in statistical alligators and unacceptable margins of error) to recognize one insignificant outlier in a vast array of cranky market analysts.
But I know you. At least, I'm very familiar with your employer and the department's generally consistent work product. I can only assume that your leadership has contributed a great deal to the government's standards of quality control and accuracy (whatever they may be).
Indeed, I've spent much of my professional career trying to digest your reports, inventories and surveys. Despite all those know-it-all doctors at the Mayo Clinic, I blame none of your sometimes stomach-turning output for either my perforated ulcer or hiatal hernia.
Oh, dear. Have I got off on the wrong foot?
Honestly, Mr. Director, the last thing I want to do is sound like some crackpot libertarian who thinks bureaucrats should all be turned into Uber drivers or hotdog vendors. Nor do I want to leave you with the impression that I'm one of those impossible complainers within the production sector who simultaneously insist that 1), they've never been contacted by an official enumerator regarding crop conditions or livestock numbers, and 2), if their sacred privacy is ever disrupted by fact-finders from USDA, they will simply supply them with a big pack of lies.
More than once, I've actually defended your statistic efforts before a host of detractors looking for something to blame for lower-trending futures (sorry, meat demand) or inadequate packer spending. All too often -- when complicated commodity markets prove disappointing -- USDA data and estimates are simply seen as the easiest dog to kick.
Furthermore, I've been known to remind the same disgusted crowd that commodity accounting is a necessary part of successful economic planning. Whether the government assumes the role -- or some private bean counter steps to the plate -- farmers and ranchers understandably insist somebody make a credible, widely accepted mark on the wall.
As imperfectly as the process always is, I argue that USDA enumerators, collators and statisticians can at least make the best claim of impartiality and objectivity.
Believe me, Director Kerestes, I don't qualify as an unpaid cheerleader for the National Agricultural Statistics Service (NASS). I've angrily dismissed many oddball reports that may have come across your desk with both derision and expletives. Yet I want you to know that your hard work at NASS is appreciated by many -- hard work that's imperfect, but nonetheless processed in the good faith absolutely required by efficient markets.
Excuse my long-winded ways, but I've finally made it to the real reason for this open missive. It concerns possible changes in the timing of livestock report releases.
Last week you reportedly spoke to an industry group, saying that some kind of review within NASS was underway concerning the best time of day to unveil new cattle and hog reports. You said, "The USDA is open to changing its schedules in 2019 if the review indicates that is warranted."
Currently, livestock reports are announced after CME futures are closed, with just a few exceptions linked to holidays. I assume that the changes now being "reviewed" would allow report disclosure within CME trading hours.
Here's my question: Does your review include some kind of comment period whereby all producers, traders and market-watchers can officially register their two cents? If such opinion-gathering is not in the works, I would urge you, and your colleagues at NASS, to put something together in this regard.
Just to get the ball rolling, allow me to be one of the first in your sampling: It's a lousy idea.
Given the increasing volatility of livestock futures in recent years (especially cattle contracts), unveiling new, complicated data in the middle of a trading session strikes me as utter nonsense, like experimenting with gasoline to put out a house fire.
God forbid traders and analysts pause for more than a short breath to seriously examine the real meaning and implications of new data. Whatever happened to deliberation? Thanks to 24-hour cable news and the likes of Facebook, such a concept has become as endangered as the black rhino and landlines.
Who will unquestionably benefit from the release of livestock reports during trading hours? The only reasonable advocate I can see is the CME. It's like the casino moguls of Las Vegas insisting that robotic blackjack dealers are needed for speedier play and the greater enjoyment of manic gamblers.
Cut me a break.
Anyway, Director Kerestes, that's my opinion. I could be wrong. But what's important is that NASS remain both thorough and critical in making this review before timing decisions are made.
Thanks for listening and keep up the good, albeit underappreciated, work.
John Harrington can be reached at firstname.lastname@example.org
Follow him on Twitter @feelofthemarket
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