So we’ve got a StatsCan acreage report in our hands, have a USDA one coming out this week, and we’re fully involved in playing the weird game of parsing the reports for The Truth.
(No big shockers in the report, it seems, other than the interesting but utterly non-market-moving finding that farmers say they seeded 1.1 million acres of soybeans in Manitoba, and lots more than expected in Saskatchewan. Go check our web story on it on the main page at www.producer.com)
Part of what we’re going to try to assess is what farmers really planted. Part of what many are trying to guess is what StatsCan/USDA is going to say. (That game’s already done for StatsCan, obviously). And part of what we’re going to try to do is calculate what kind of a crop we’re going to be harvesting in a few months time, if farmers planted what they say they did and if they planted what we think they actually planted free of the BS they fed to StatsCan and the arcane calculations of the USDA.
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These reports can be market moving, or completely ignored, and you can never tell which before you see the numbers and whether the market feels like reacting. Sometimes they shake things up, sometimes they don’t. Impossible to anticipate.
For commercial users it’s vital to know what’s actually going to be harvested, because that’s what they have to buy in order to make their goods.
For farmers it’s important to know what’s really growing out there, because that should affect the market eventually, especially after it’s all harvested and most of them get marketing.
For traders it’s a mixed situation. They tend to be very, very concerned about the exact numbers the agencies come up with, because for a while anyway, they’ll be trading those numbers. Even if people pick apart, attack and try to undermine the legitimacy of the numbers, they’re still “what we’ve got,” as numerous traders have told me over the years. They have to do their trading based on something, and if they just chuck out USDA or StatsCan and go with other numbers they’re being pretty ballsy and probably irrational. Most have their own hunches and suspicions about what’s really out there, but default to generally accepting the official numbers because otherwise they are laying themselves wide open to a hard kick to the midsection. (Grain-focused firms often trade their own numbers because that’s their expertise, but for the thousands of futures traders who only shallowly trade in the grains futures, ignoring the official sources is hard to do.)
So that sets up the pre-report game of trying to guess what USDA or StatsCan is going to find. Often this has little to do with what’s actually growing in the fields, but entirely about what they’re going to say and why, often tinged with conspiracy talk about why they’re going to intentionally skew the data. But being able to predict what USDA is going to say is key to guessing how all the non-grain-focused traders are going to react three nanoseconds after it comes out. So the underlying reality doesn’t really matter.
This is how we spend our summers: guessing about weather, about crop conditions, about what’s going to be in reports, about who’s gonna get traded in the off-season. And in the end all we can do is sit back, let the crops grow, and see what comes in at harvestime.
