Source: John D. Anderson, Deputy Chief Economist, American Farm Bureau Federation
The cattle market, indeed all agricultural commodity markets, spent the last week in a virtual information blackout. The issuance of USDA market reports has been deemed a non-essential function and has thus been suspended during the government shutdown. It is not clear how long the shutdown will last, but apparently we will live without public market reports for the duration.
In normal times, participants in commodity markets are faced with an embarrassment of riches when it comes to market data. Particularly since the advent of mandatory price reporting, the coverage provided by public reporting on prices and volumes in the livestock sector has been impressive. It has also been quite easy to take for granted. Daily – and on some items (e.g., slaughter cattle and boxed beef) twice daily – reports have for over a decade now been available at the click of a mouse. This data has been more than just a convenience. Market institutions of considerable importance have built up around the availability of the data. The cash settlement of Lean Hog and Feeder Cattle futures contracts against cash market indices constructed from Agricultural Marketing Service (AMS) data are a couple of examples of such institutional arrangements. Formula price contracts, a staple in both the hog and fed cattle markets, also depend on timely, transparent information to provide inputs into price formulas.
In the absence of AMS price/quantity data, alternatives will have to be found. Private sources do exist. By all accounts, the Yellow Sheet from Urner-Barry has gained a fair number of subscribers over the past week. How good of a substitute for USDA data are such private data sources for cattle and hog prices? We are in the midst of a natural experiment that will surely tell us quite a bit about that.
Within USDA, the shutdown is affecting more than just AMS market reports, of course. Earlier this week, it was announced that the October supply and demand estimates report would be a casualty of the shutdown. The October report is generally one of the most closely watched monthly updates because it incorporates acreage information from FSA and so generally represents a more definitive figure for acreage of the major crops than prior reports. As usual, private firms have put out their own pre-report estimates in advance of the report. This year, it looks like the pre-reports will have to suffice as a proxy for an official report – at least for the time being. The average of the pre-reports for corn and soybean harvested acreage, yield, production and 2013/14 ending stocks as compiled by Thompson-Reuters is summarized below: