The U.S. Department of Agriculture will publish two widely-followed crop reports as scheduled Nov. 9 after rejecting a request by R.J. O’Brien & Associates, a big grain futures broker, to postpone the releases in the aftermath of the collapse of MF Global Holdings Ltd.
Lance Honig, one of the USDA’s top statisticians, said the agency reviewed R.J. O’Brien’s request but will proceed with the scheduled release of the monthly Crop Production and Supply and Demand reports. Both are scheduled for 7:30 a.m. Central time Nov. 9.
In a letter sent earlier today to Agriculture Secretary Tom Vilsack, R.J. O’Brien asked for a delay, citing the “unprecedented events” following MF Global’s bankruptcy filing Oct. 31.
The bankruptcy “triggered a massive transfer of accounts to an array of futures commission merchants,” said Gerald Corcoran, chief executive of Chicago-based R.J. O'Brien. The firm “respectfully petitions” the USDA to postpone the reports to Nov. 14 from Nov. 9, according to a copy of the letter.
R.J. O'Brien is among the largest firms that execute and financially back trades in corn, soybeans and other agricultural futures and options markets on Chicago-based CME Group. As of the end of August, R.J. O'Brien had about $2.78 billion in futures customer accounts, according to the Commodity Futures Trading Commission, the industry regulator. MF Global had $7.27 billion in customer funds.
A postponement of the reports would be intended to reduce price volatility until accounts transferred from MF Global to other trading firms “are fully operational and thus better equipped to manage risk triggered by changes” in the USDA's reports, Corcoran said.
Honig, who’s chief of the crops branch at the USDA’s National Agricultural Statistics Service, declined to elaborate on why the agency rejected R.J. O’Brien’s request. But he said it’s “very rare” to delay USDA reports for any reason.
One of the most-recent incidents Honig said he could recall followed the Sept. 11, 2001, terrorist attacks. In that case, USDA reports scheduled for Sept. 12 were postponed by about two days.
The Crop Production and Supply and Demand reports are closely scrutinized by grain traders, food processors and others for indications on price direction for corn, soybeans, wheat and other key commodities. USDA crop figures that diverge significantly from trade expectations often lead to wide swings in futures prices at CME.
According to a survey of grain analysts, the U.S. corn harvest will be about 0.2 percent smaller than the USDA projected last month, while the crop’s yields are on track to drop to a six-year low.
About 12.4 billion bushels of corn will be harvested this fall, based on the average estimate in a survey of 22 analysts conducted by Dow Jones Newswires. The average estimate is down about 30 million bushels from the 12.43 billion bushels the USDA estimated a month ago and would be down 0.6 percent from the 12.46 billion bushels harvested in 2010.