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Cloudy statistics are clearly worthwhile for ag industry

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Reading Time: 4 minutes

Published: January 12, 2023

It’s worth knowing when things are clear and when they aren’t. | Getty Images

Job growth has surged in recent reports in Canada and the United States.

In Canada, an increase of 5,000 jobs was expected, but a whopping 104,000 were recorded.

In the U.S., jobs also jumped by more 200,000, also beating expectations.

But U.S. wage growth slowed. And through the week various stats seemed to suggest that inflation might have stalled.

The unemployment rate fell again, to extremely low levels and inflation fell. Weird, huh? Try to fit that into your Phillips Curve and smoke it.

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This appears to be a time of contradictory economic stats, and that extends to the grain markets as much as anywhere else. In multiple areas we are wrestling with numbers that don’t create a clear picture of where we’re going.

Grain trade folks, logistics people and farmers got to see a guy wrestling with those sorts of stats when it comes to grain barge flow, freight rates and price spreads along the Mississippi River system, which is a major U.S. export route.

The massive drought that plagued almost the entire centre of the continental U.S. dried up the streams, rivers and groundwater that feed the Mississippi to the point that barges had to be only partially filled, towboats could only move two-thirds of their usual number of barges, barges ran aground on rising sandbars, and old ghost ships arose as wrecks were revealed by the declining water levels. Remains of an ancient lion that roamed the American interior 11,000 years ago were found in Mississippi mud.

That has been a crisis for American grain exports that go out through the Gulf of Mexico because most of them get there by barge. Smaller barge loads, fewer barges, delays due to groundings and assorted other complications don’t help move grain to port.

At the heart of statistically assessing how the system is operating are people like Richard Henderson, a U.S. Department of Agriculture analyst, who spoke at the Fields on Wheels conference in December. He’s part of the team that puts out a weekly report on barge transportation, and he led people through an unpacking of some of the stats that shine a light on what’s really going on in grain barge transportation system.

It was fascinating to see how he peers through the various numbers of barge prices, both spot and forward, water levels at various points along the waterway, port prices in the Gulf and Pacific Northwest, as well as railway and other statistics. Moisture numbers come into it, as well as reservoir levels.

At the time he spoke (mid-December,) he was trying to determine if the problems in the system were being alleviated. Some water levels were better than in mid-fall, but others weren’t. Prices had declined but weren’t back to “normal” and were bouncing around a bit.

The river’s a mess and so is the outlook for a while, probably.

That’s what we have with the general economy too. So many contradictory signals are floating around, bumping into each other, giving analysts and Bloomberg radio hosts endless fodder for thought and chatter.

When the jobs data came out Jan. 6, the markets rose. This was attributed to “the markets” deciding that the increase in jobs and decline in unemployment rates was a less-big-deal than the lack of upward wage pressure. In other words, a rational response to contradictory data.

That may be, although I tend to believe that the markets are generally possessed by moods and complicated psychology, similar to the way my long-departed iguana Bertrand would, at times, mysteriously stare off into the spirit world, in communion with forces we can neither see nor hope to understand.

Fortunately for us, we don’t need to peer too far off into the spirit world for an understanding of where our industries and economy are, most of the time. The USDA produces outstanding statistics on elements of its economy, grain system, transportation system and much else that we population-poor Canadians can only dream of, at least those of us who like pondering stats.

“What’s fascinating from a Canadian standpoint is to see the price visibility,” commented Hedley Auld, a former senior Canadian National Railway official, to Henderson about the spread data comparing recent grain prices from the U.S. Pacific Northwest and Gulf ports.

U.S. farmers and their agriculture industry are blessed with a wealth of statistical analysis from the USDA and other agencies that we Canadians can only yearn for. They add so much to an understanding of what’s happening now, rather than a few months in the past, which is often our plight up here.

But rather than just yearn, we should defend the stats we currently have — budget cutters will always target analysis, so beware thin times like those coming — and we should push for more.

The stats Henderson presented at Fields on Wheels didn’t show any clear direction that the U.S. barge system is going. Nor did the employment and wages data released in early January. But they offer us a glimpse of a confusing economic outlook that’s well worth taking into account when planning for the next year.

As the old saying goes, there are “lies, damned lies, and statistics.”

American farmers are blessed with more of possibly all three of those than are you. It’d be nice if we could get more of the third, even if that doesn’t mean we’ll end up with a crystal clear view of the present or likely future.

It’s worth knowing when things are clear and when they aren’t.

About the author

Ed White

Ed White

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