As USDA remains largely shut down waiting for a budget deal, the lack of number-crunching could start to impede the Jan. 11 slate of crop reports, including the quarterly Grain Stocks, and monthly Crop Production and World Agricultural Supply and Demand Estimates.
President Donald Trump was set to meet Wednesday afternoon with congressional leaders. He spoke after a cabinet meeting, indicating there may be room to negotiate on his demand for a wall, but declined to be specific. When asked about how long a shutdown might last, he said, “As long as it takes.”
USDA puts a lot of attention on its January crop reports. After all, as every market analyst knows, it was the early January orange juice forecast that made Billy Ray Valentine and Louis Winthorp rich while putting the Duke brothers in the poorhouse in the 1983 movie “Trading Places.”
“The suite of Jan. 11 reports is probably one of the bigger months in terms of impact on markets and other sorts of things,” said Joe Glauber, former USDA chief economist and now a senior research fellow at the International Food Policy Research Institute.
The Jan. 11 reports also include the annual Crop Production forecasts, broken down by state, for most crops, as well as Cotton Ginnings, Rice Stocks and Winter Wheat/Canola Seedings.
As DTN Lead Analyst Todd Hultman noted, “The January WASDE report is often considered the final crop estimate of the season and has surprised markets at times. January’s estimates are not always final, however, and it wouldn’t be surprising to get another soybean crop estimate later, as this fall saw tough harvest conditions in several areas.”
Hultman added that three of the past five years saw March soybean prices trade higher by double digits after the January report, but a 36 1/4-cent loss was posted in 2015.
The January report will also have helpful estimates of South American crops and U.S. soybean demand, “which traders are waiting eagerly for while the government is currently not publishing U.S. export sales,” Hultman said.
The quarterly Grain Stocks reports also are the best measure of actual grain demand from any sources — public or private — and stock numbers from Dec. 1 are no exception, Hultman added.
USDA warned in its shutdown plan for the Office of the Chief Economist that the “most significant OCE activity that may lapse during a shutdown is the preparation and release” of the monthly WASDE report, even though the chief economist and chairperson of the World Agricultural Outlook Board are exempt from the furlough.
A lot of the work by the National Agricultural Statistics Service for the Jan. 11 Crop Production and Quarterly Grain Stocks reports has already been done, but needs to be complied and analyzed. Most surveys for grain stocks and wheat seedings also were done the first two weeks in December, so USDA has the numbers, but they may not have been tabulated before now. NASS could be the main determining factor on when some of those reports come out because of the time it takes for NASS staff to compile and analyze the data from those earlier surveys.
“The delay would be pretty much contingent on when NASS can put out numbers on annual production and stock numbers,” Glauber said.
One of the biggest concerns for the WASDE report comes from the export sales numbers, which the economists would not get until a shutdown ends. Companies still have to report flash sales, but none of those sales are being announced right now by the Foreign Agricultural Service in daily or weekly reports during the shutdown.
Then there are all the variables that go into adjusting WASDE projected usage and ending stocks for the various crops as well as accumulating the data from FAS and other sources for the global projections.
“All those numbers take time, and they don’t do those numbers until January,” Glauber said, referencing the January adjustments to a particular crop. “Soybeans is a commodity because you have a lot of survey information on a lot of the demand components — you can look at crush and exports and stocks report — and back out from there and look at implied production relative to what the survey numbers are.”
Glauber said he didn’t know what the exact drop-dead date would be for the Jan. 11 reports, but said it takes NASS four or five business days to effectively crunch the needed numbers. The January report requires a lot of deskwork before the annual numbers are released.
“I suspect after the 4th, by Friday, they will have to make a decision about whether to postpone the [January] 11th report,” Glauber said. “But I would think if you get the shutdown over in the next week or two, then you add four or five business days and get the report out then.”
Like much of the market drama portrayed in “Trading Places,” the main actual Crop Production report in January focuses on citrus. That’s the only commodity survey actually done by NASS in January, the first of the citrus season, and largely focuses on Florida. So those numbers would be affected by the current shutdown.
Glauber was chief economist in October 2013 when USDA canceled the monthly WASDE and Crop Production reports because of a 16-day government shutdown. The reports were affected then by halting NASS crop survey work.
“That was really very disruptive because NASS was in the field and had submitted samples to the labs, but they couldn’t do anything with them,” Glauber said. “It kind of hit at a very critical month when you are still surveying every month and getting a lot of field information. January is still a very critical month, but it’s a lot of deskwork because the survey work was done in December.”
USDA analysts may be off work, but they are likely still keeping close tabs on their specific market responsibilities.
“These analysts do follow these things day to day, and I suspect a lot of them are doing it anyway — following the markets and things like that on their home computers,” Glauber said. He recalled that, in the 2013 shutdown, he and other USDA economists and analysts couldn’t help but get together to talk about the markets.
“All these guys wanted to do was get back into work and look at the markets again,” Glauber said. “So we were meeting in coffee shops just talking about the markets and exchanging a lot of information. It was purely voluntary, because these guys just wanted to get out and talk about what was going on. I think it speaks a lot to what kind of dedicated crew they were, and I suspect they are doing that now.”
Chris Clayton can be reached at Chris.Clayton@dtn.com
Follow him on Twitter @ChrisClaytonDTN