Market Matters Blog

Who's Your Data?

Todd Hultman
By  Todd Hultman , DTN Grains Analyst
Connect with Todd:

Welcome to 2016. There seems to be no end to the amount of information technology being applied to farming these days, and given the perennial task of needing to squeeze more yield from minimal cost, the trend for more information is not likely to ease anytime soon.

More than ever before, today's farmers are able to access and monitor precise information about all sorts of things -- soil temperature and conditions, planting rates, fertilizer applications, and yes, even a field's crop yield as it is being harvested.

It's that last one that has made many understandably nervous about just who gets to see those yield results. There is obvious benefit for the producer wanting to know which parts of his field performed better, but what about the maker of the combines getting real-time harvest data from thousands of producers? Is that a way for big ag to exploit markets with a new kind of inside information?

I suspect the companies had that hope in mind when they rolled out these smart combines, but if they did, they have to be disappointed with how this year has gone. To explain, suppose we owned a big mega-corporation that had access to the data on every combine in the U.S. There's no way to go wrong with that arrangement, right?

Well, there may be. The main flaw in this plan is that to get a good read on national corn yields, for example, we need samples from Illinois and Iowa and those don't start coming in sufficient numbers until about mid-September.

Mid-September? By the time we get to mid-September in most years, the U.S. already has a decent planting estimate and summer weather patterns have been analyzed and over-analyzed. By mid-September, the market has also heard from crop tours and seen two USDA crop estimates, based on objective field samples.

Worst of all, mid-September is just three weeks ahead of the time when corn prices typically make their seasonal low. So back at our hypothetical home office, we get "breaking news" in mid-September that this year's corn yields are coming in at record-high levels and we tell our trading desk to sell, sell, sell.

Selling December corn on Sept. 15 this year put us short at $3.30 a bushel. Our harvest data was even confirmed by a 15.06-billion-bushel corn crop estimate in USDA's October WASDE report.

But as often happens in markets, December corn prices broke from script and closed at $3.54 1/4 on Friday, the highest in over two months. Let's just say the suits back in our hypothetical office are not pleased.

As appealing as the idea of cornering real-time harvest data might be, the reality is that the data is too late in most years to be of much help. Personally, I would be more concerned to hear that big ag had the corner on planting data. Oh, wait...

Todd Hultman can be reached at todd.hultman@dtn.com

(AG)

Comments

To comment, please Log In or Join our Community .