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The Trade Struggles To Move On From June 30 USDA Report, Analyst says
The Trump administration has coined the terminology fake news when it comes to some reporting of events and articles regarding the administration.
One has to wonder if the Acreage Report issued on June 30 by the National Agricultural Statistics Service was nothing more than fake news as well.
With extraordinary weather circumstances prohibiting planting progress, the expectation for accurate report data was heightened, and yet the USDA knowingly released the June 30 Acreage Report expecting to resurvey producers in July.
It was not until well after the report was released did they indicate that a resurvey, if necessary, would occur in July.
On June 2, 33% of the corn crop had yet to be planted (latest crop planting ever). Heavy rains continued to pound parts of the Midwest. The survey asked farmers if they intend to plant. Having their back up against the wall in early June, they would likely say yes. Prices were rallying, and they would plant if possible. Common sense should have prevailed.
The USDA could have delayed the survey. Or, at a minimum, issued a disclaimer prior to the release of the report, stating a resurvey would occur due to lack of accurate data. This would have been the responsible and correct approach, providing the marketplace with a more intentional plan to provide full transparency.
Instead, they let the market respond to incredibly negative news, which sent prices limit lower. On March 31, farmers said they intended to plant 92.8 million acres of corn. The June 30 report indicated 91.7 million, or a decline of 1.1 million acres.
It is estimated, potentially, that Illinois alone could have close to 1 million acres of prevent plant. Concerns in Indiana, Ohio, the Dakotas, Minnesota, Wisconsin, and Missouri suggest a much, much larger number of acres in jeopardy of not being planted, perhaps 5 to 7 million.
The USDA knew they had less than realistic information. They released it, only to then backtrack. The agriculture community deserves a better process of providing timely and accurate information than was exhibited last Friday. What is the point of releasing a “fake” report?
Regardless of their intentions, this is another example of unexpected price moves. Prices move on facts, rumors, and “fake” news. No one knows for sure where prices will go. Prior to any report, we encourage customers to plan for the unexpected. Positioning yourselves for all scenarios is time well spent.
If you have comments or questions, or need help implementing put option strategies, contact Top Farmer at 800-TOP-FARMER, extension 129, and ask for Bryan Doherty.
Futures trading is not for everyone. The risk of loss in trading is substantial. Therefore, carefully consider whether such trading is suitable for you in light of your financial condition. Past performance is not necessarily indicative of future results.