Under a shutdown, the U.S. Department of Agriculture plans to furlough employees responsible for some daily and weekly statistical reports on agriculture that are closely watched by traders and investors. Any delays of such reports–which include everything from daily wholesale pork prices to weekly figures on chicken-egg supplies–could affect commodity and equity investors who rely on the information.Yeah, Dad, I'm sure all us little guys would be much better off if the government just stayed out of our way.
A shutdown “certainly would make things more difficult for investors,” said Brett Hundley, an agribusiness analyst with BB&T Capital Markets in Richmond, Va. “The USDA presents some of the best data in the world for any industry (emphasis mine), and it can lead to good decision-making by investors.”
Mr. Hundley said big agriculture companies such as Tyson Foods Inc.TSN +0.78% and Monsanto Co.MON +1.06% likely would face little impact from a shutdown, however, in part because they have considerable data of their own at their fingertips. He also said he doesn’t expect any shift in strategies at the companies due to a shutdown in Washington. “For operations of companies in the industry, it would be business as usual,” he said.
Tuesday, October 1, 2013
Take That, Dad
Dad and I have been having a running argument for several years. Every time a planting intentions or crop production report comes out and riles the markets, Dad claims the government ought to quit making forecasts and leave things up to the private operators to handle. I point out to him that if the markets are so smart, they ought to know what the actual conditions are and would ignore the supposedly way out of line government reports. I also mention that the Cargills and ADMs of the world might actually talk their book to move the market the way they want and really fuck us over. But with the government shutdown, we get this from, of all places, The Wall Street Journal (a news source Dad reads):
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My guess is that the big boys who have an independent understanding of what is happening in agriculture (Cargill, ADM, etc.) are going to use this opportunity to clean out the suckers (like the Duke Brothers in Trading Places.) Those guys don't know anything about agriculture and don't care—they are just running a casino, after all. On the other hand, Cargill can make some educated guesses about the market by simply calling up all their elevators and asking how many trucks are waiting to unload.
ReplyDeleteI am NOT implying that USDA data will not be missed. It will be by a whole class of people who have no other purpose in life than to cream off a little profit from the movements of commodities. It might even be missed by the real farmers—but then they haven't been the target audience for a LONG time.
Yeah, I'm sure FC Stone, Cargill, ADM Louis Dreyfus and the other big ag guys, along with Goldman and a few others have as much or more research as the feds. However, I wouldn't trust a word those guys say publicly or privately (actually, that's not quite true, because we consult with the local Cargill guy quite a bit), because considering how well off some of Goldman's muppets were, I know those folks don't give a damn about regular folks.
ReplyDeleteThe Wall Street fund guys ay benefit from the reports, but I think the government, mostly in a naive way (since farmers are way too distrustful and dismissive of the government), thinks that their reports will help farmers out. The problem is that farmers are naturally long in the market, and if the report is predicting a bumper crop, they'll find any way they can to disbelieve it, even if they think their own crops are the best they've ever grown.
I tend to think the feds think that the best data they can get will help farmers out, but I think that if the truth counters what we want to hear, we'll go with our guts.