COLUMN-How a U.S. government shutdown might impact grain markets -Braun

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(The views expressed here are those of the author, a Businesshala market analyst.)

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FORT COLLINS, Colo., Sept. 29 (Businesshala) – Chicago grain futures have softened recently compared to wild price volatility earlier this year, and the US government’s shutdown calm streak if history is any indication. can increase.

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Unless a new funding bill is passed, funding for most US agencies will end at midnight on the Friday before the new fiscal year. However, a vote could be held later on Wednesday or Thursday to defer the bandh and provide funds till early December.

If that bid fails, agriculture will be affected in some ways, primarily in information available from the US Department of Agriculture. But during the other recent closes, CBOT maize and soybean futures traded in a narrow range irrespective of the reasons for the fall in prices.

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The 2013 shutdown lasted 16 days and canceled the USDA’s October World Supply and Demand Report. Offices reopened on Thursday, October 17, 2013. More recently, a record-long shutdown of 35 days from December 22, 2018 to January 25, 2019, further severely delayed government data.

However, the futures market seemed uncertain how to react. CBOT corn and soybean futures traded in a very narrow range in January 2019, and remained relatively high despite heavy US supply conditions, especially for soybeans.

When the government shut down in October 2013, US farmers were at the height of their corn harvest, and corn futures in previous months were trading at their highest levels set a year earlier. Futures were relatively stable during those 16 days.

The 2019 price action was more interesting, however, as the US-China trade war got underway. The two sides reached a partial settlement in early December 2018 and China started buying some US soybeans before the data blackout.

This allowed endless speculation as to whether China was still buying as the USDA was not publishing weekly or daily export sales. Soybean futures actually stalled in January 2019 despite an absolutely disastrous US export season with China.

USDA data eventually showed that soybean stocks had easily hit record lows on December 1, 2018, although traders should have seen it coming, especially because the agency was still reporting weekly export inspection data during the shutdown. because it was considered important for operations.

lost statistics

Trader data commitments from the US Commodity Futures Trading Commission were unavailable during the shutdown and the numbers did not pick up pace as of March 8, 2019. When the data finally began to come out in late January, the corn market was shocked by the results.

The most active corn futures fell only 2% from late December 2018 to late January 2019, but money managers sold their entire net-long positions in CBOT corn futures and options during that period, and the market was anticipated to lose no more than 2%. had no idea. Judged them for remaining decently bullish.

Money manager net long was 128,177 corn contracts as of December 18, 2018, although it originally ran through the end of January, leading to a record bearish drive in April 2019. Commodity funds, for one, have held strongly optimistic corn views. years now, although the lack of confirmation may be an issue should the government shut down.

Expectations of a healthy US corn and soybean export season in 2021-22 have recently supported futures, and that information will be elusive at the close. However, this may or may not be problematic depending on one’s perspective, as pure speculation on sales was enough to support prices in 2019.

Data delays in 2019 were disappointing. Although the shutdown ended on January 25, the market did not see export sales data from January 4 to February 14 until February 22, 2019, when the USDA dumped six weeks’ worth. figures.

The industry is also expecting an update on U.S. corn and soybean production, along with a USDA supply and demand report on October 12, although the shutdown will quell those reports as of 2013.

In 2019, the USDA missed out on its impressive January report, which includes annual summary of crop production, quarterly grain stocks, US winter wheat sowing and monthly supply and demand. Those numbers were published in February, although Businesshala still collected and published analyst estimates in early January just as the report was due.

Editing by Matthew Lewis


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