Todd's Take
An Unnecessary Risk
In case you've been away from the news lately, there will be no USDA reports of Dec. 1 Grain Stocks, World Agricultural Supply and Demand Estimates (WASDE), Winter Wheat and Canola Seedings, Rice Stocks or Cotton Ginnings on Friday, Jan. 11. USDA's ability to put out information has been squelched by the powers that be, while lawmakers can't agree on a plan to fund the U.S. government.
The cancellation of the Jan. 11 reports has generated interest from media seeking to understand how not having this information might hurt farmers. My answer has been that not having these reports is an inconvenience, but markets do function without USDA reports. It's not the end of the world as long as the shutdown doesn't last too long.
As DTN's Ag Policy Editor Chris Clayton described in a DTN article on Wednesday, USDA's more important activities for farmers are servicing disaster loans, FSA loans and trade-aid payments.
See "Partial Government Shutdown" at:
Even so, some were hoping January's WASDE report would have the final corn and soybean crop estimates of 2018. After a disastrously wet fall in many areas, there was a chance of seeing a smaller soybean crop estimate. However, that situation is minor in comparison to the potential price impact that trade talks with China will have, and no USDA report offers any insight for that.
Corn and soybean crop estimates for Brazil and Argentina were also anticipated in Friday's WASDE report, but missing a month shouldn't cause much harm, as the crops are still developing and other estimates are helping fill the gaps temporarily.
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On Wednesday, the private consultant AgRural estimated Brazil's soybean crop at 116.9 million metric tons (4.3 billion bushels). On Thursday, Brazil's crop agency, CONAB estimated the soybean crop at 118.8 mmt (4.4 bb) and the corn crop at 91.2 mmt (3.6 bb).
The Dec. 1 Grain Stocks is the report I will miss the most, as USDA's quarterly tallies are the most accurate assessments of grain demand we have in agriculture. They are also the one check and balance that keeps WASDE reports in line.
While the cancellation of USDA's Jan. 11 reports have attracted a lot of attention, the real threat to U.S. agriculture, as I see it, is coming from the lack of USDA's daily and weekly reports of export sales. If the shutdown ends soon, there will probably be no harm. But the longer the blackout persists, the greater the chance that a nation like China could take advantage of the door being left open and unwatched.
Some readers may recall the U.S. didn't always have daily and weekly export sales reports -- they began in 1973 after Americans were duped by the Great Grain Robbery of 1972.
In July 1972, the Soviet Union quietly bought 10 million metric tons of U.S. grain on the cheap, leaving the U.S. short of grain reserves and eventually sending U.S. prices dramatically higher. USDA's export sales reporting program was started in 1973 to prevent such a large-scale deception from ever happening again.
See "About the Export Sales Reporting Program" at:
Had the export sales reporting program been in place in 1972, U.S. farmers would have been in a better position to benefit from rising prices before all the grain got out the door, as Russia's purchases would have been made known much sooner.
Fast forward 46 1/2 years and the federal government's partial shutdown has once again left the U.S. wide open to possible foreign abuse. Yes, the world is much different than it was in 1972 and a deception on the scale of what the Soviet Union pulled off is not likely today. However, on a smaller scale, if a country wanted to buy U.S. grain on the cheap, this is a time they could do so without triggering the usual warning bells that would result in higher prices as their purchases became known.
In the past week, the U.S. Labor Department released reports on nonfarm payrolls, U.S. unemployment and weekly jobless claims, and the Department of Energy released weekly inventory reports. USDA needs to consider a plan to keep the daily and weekly reporting of export sales functioning as a matter of economic security.
I don't blame USDA for not being well-prepared for a government shutdown, as these political disruptions have typically been short-lived. However, now that government closures are happening more frequently, USDA should reconsider its priorities. We've been burned by foreign exploitation before.
Todd Hultman can be reached at Todd.Hultman@dtn.com
Follow him on Twitter @ToddHultman
(BE/AG)
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