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Thursday, September 20, 2012

USDA Changes Times That Some Speculative Reports Are Released


Now, there’s a switch.  USDA has announced its decision about what to do with the conflict between its reports being released and the activity of the market.  Many expected the release of the speculative reports would come during the down time for the CME in the late afternoon, but that was not the case.  And it is an interesting solution to a vexing problem the USDA faced.


Turn the calendar back to May when the InterContinental Exchange announced that it would add corn, soybean, and wheat contracts to its list of electronically traded contracts.  That seemed innocent on the surface, but the exchanges in Kansas City and Minneapolis, led by the Chicago Mercantile Exchange, scrambled to extend their electronic commodity trading, since the ICE was a 24-hour per day exchange.  The conventional exchanges did not want to be left out, and first announced a 22 hour per day trading period, and later shortened that to 21 hours.  The open outcry trading in Chicago was extended to close at 2 p.m. with the electronic trading, and was extended to begin at 7:20 a.m. on days when USDA speculative reports were released.  Because of the changes in the trading, USDA wanted to see what the public thought about the change, as it pertained to when reports were released.  Interestingly, many of the comments only asked for a report release before or after the open outcry session, and ignored the fact that the electronic exchange was trading from 5 p.m. to 2 p.m. the next day. 


The revised exchange trading schedules meant that trading would now be occurring early in the day when the USDA typically released its speculative reports at 7:30 a.m. Central time.  Retaining its previously announced release times for the summer and fall months, the USDA has said it will change its release times beginning in January 2013.  In a brief news release Wednesday, “The U.S. Department of Agriculture today announced that the National Agricultural Statistics Service (NASS) and World Agricultural Outlook Board (WAOB) will begin issuing several major USDA statistical reports at 12:00 noon EDT beginning in January 2013. The current USDA release time of 8:30 a.m. EDT will remain in effect until January 1, 2013. USDA statistical reports affected are: World Agricultural Supply and Demand Estimates, Acreage, Crop Production, Grain Stocks, Prospective Plantings, and Small Grains Summary. The time for livestock reports currently released at 3:00 p.m. will not change.”



The decision comes after the USDA took public comments for more than a month during the late summer, and said stakeholders submitted 147 comments.  

Comments came from farmers (most of whom wanted the reports released either before or after the open outcry sessions), elevators and processors (most of whom wanted the reports either early morning or late afternoon), farm and commodity organizations (several of the major ones sought a late morning release to allow the most liquidity in the market with a potential pause in trading), and individual traders, (who were all over the board in their requests.)


Among the comments:

  • Farmer Jeff Thompson said, “As a grain broker and a farmer I think the market would be better served if the reports were pushed back to 10:00 am CST when the floor trading has already begun. The options and some of the spreads (beans notably) are more liquid and deeper in the pit than on the screen. Makes sense to have all pistons firing when the news hits the market rather than just a few.
  • A joint letter of American Farm Bureau Federation, American Soybean Association, National Association of Wheat Growers, National Corn Growers Association, National Grain and Feed Association, and North American Export Grain Association said: “We believe, generally, that major statistical reports…should be released publicly at a time of day when volume is heaviest and liquidity is deepest. This will help market participants cope with the added volatility we believe is virtually certain to occur as reports are released during an extended trading day.”  They further asked that exchanges “Provide a short period of time in which to analyze the data contained in NASS reports before trading resumes.”
  • The CME said, “Given the importance of these reports and the potential impact they can have on the market, it is our view if the reports are released when the market is open these reports need to be released when there is the greatest liquidity and the potential for the greatest number of market participants to access the markets.  In our view, this would be during the window from 10 a.m. to 12 p.m. CT.”  The CME also said it would “suggest a trading halt of no more than 30 minutes around the release of key USDA reports.  CME would be willing to work with the USDA and the grain and oilseed industry to facilitate an appropriate time for report release.”
  • Economist John Otte of Farm Progress Publications recommended a 3 p.m. time, which would “Let (the statisticians) get good night's sleep before crunching the numbers.”
  • Farmer Jim McFarland sought a release time of 3 p.m. or a Friday or a Saturday morning, because, “Big organizations with lots of resources can make decisions faster than small companies and farmers. Releasing information on a Friday evening lets everyone have time to study the information and make responsible decisions.”
  • Farmer Doc Cottingham suggested an 8 a.m. release time, but thought the whole issue was less than fair, “It is absolutely stupid to allow the ICE to trade such long hours, and it is stupid to release reports during trade. How in the hell is an individual farmer or smaller brokerage supposed to operate a 21 hour day to manage risk? Greed and money are driving this decision, not the impact on people who rely on an open market to determine value. An eight hour trade day makes sense to me, but not 21 hours!”
  • Professor Derrell Peel, Oklahoma State University, said, “Data and analysis should not appear to be stale, which is often the case with Friday release dates. In that regard, we strongly recommend all market critical NASS reports and the WASDE estimates be released mid-week, specifically on Tuesday through Thursday. Those release days will increase visibility of reports and will allow data users and media to easily follow-up with USDA staff if needed.”
  • President Roger Johnson, National Farmers Union suggested a 3 p.m. release time, but added, “Over time, and especially in recent years, commodity markets have shifted emphasis from managing the inherent risks of farming and business to the influx of speculators and index funds…Because of this astronomical shift in the primary users of commodity markets, it is unsurprising but unfortunate that federal agencies are now forced to act to conform to the needs of speculation rather than to the needs of the farmers and businesses using their products.”
  • Others were a bit more personal goal oriented.  One wanted the report at 7:30 am. because that is when he checks his email; another wanted it at 1 p.m. because that will make the information in time for her weekly publication.


After analyzing the suggestions, USDA’s Chief Economist Joe Glauber said, “USDA considered all comments and thanks everyone for their thoughtful suggestions.  The shift to a noon release (11 a.m. Central) allows for the greatest liquidity in the markets, provides the greatest access to the reports during working hours in the United States, and continues equal access to data among all parties.”




After reviewing nearly 150 comments from farmers, commodity traders, agribusiness, and agricultural organizations, USDA has decided to release speculative grain reports at 11 a.m. Central time, beginning in January.  The change results from schedule changes by commodity exchanges, which meant the early morning release of the reports might be at a less than desirable time.


Posted by Stu Ellis on 09/20 at 09:37 AM | Permalink

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