Ag 'building gaps' post-shutdown
Though cattle are still being fed, crops are still being harvested, and commodities are still being bought and sold on the global market, a continued lapse in USDA reporting could begin to eat away at data that one economist says will have long-lasting price and market implications.
Some futures market prices, like those for feeder cattle, depend on price reports from different parts of the country, says Kansas State University livestock economist Glynn Tonsor. Without that data being reported by USDA Agricultural Marketing Service offices around the country, it makes it difficult to compile futures based on what's happening in local markets, either making those former prices something of a leap of faith or causing market players to look to other sources -- some of which may not be accurate or may take more time -- to glean the same information.
“We’re still going to find a price that makes transactions go forward, but the cost of that price discovery system, at least in the short-term, has gone up. Everybody is adjusting to find this information somewhere else, and maybe it’s not as efficient. Not everybody has the same network. Not everybody has access to the same private data sources," Tonsor says in a university report. “We are definitely building gaps, some of which will not be resolved even if the shutdown ended right now. Every day, every minute that goes by, there is something that is not being captured that won’t be back-filled. Some things that are being captured won’t be back-filled because of computer systems being down. So you have gaps in the data series.”
Ultimately, Tonsor encourages ag stakeholders to place the proper perspective on the shutdown and the information constraints it's placing on the grain and livestock marketplace through an absence of market report data. Though it's troublesome now -- and if the shutdown lasts too long, it could be troublesome on down the road -- it's important for farmers and ranchers to continue to focus on their main jobs.
"I don’t know how long this will last, but context is important,” Tonsor says. “The sun still came up today. Feeder cattle are being sold. Corn is being harvested. Those kind of physical activities I don’t think are changing. What is changing, at least in the short term until the shutdown is resolved, is how we discover ag prices, how they’re reported, and how people make buy-sell decisions.”