USDA Stumbles on Release of Market-Moving Crop Report
The USDA was unable to deliver its market-moving crop report, often described as its premier product, for 10 minutes due to a computer outage in Kansas City, prompting suspicions of profiteering in the grain market during the delay on Friday. The USDA apparently did not have a backup system to put the data on the internet on time.
Corn prices closed higher on the Chicago futures market following the USDA report. Based on a survey of 8,300 growers and spot-checks of fields, the USDA said the corn crop was slightly smaller than expected. A commodity trader tweeted that prices began moving during the outage: “Corn up with the numbers delayed. Someone knows.”
“USDA.GOV sites are temporarily down for maintenance,” said a message on the USDA site for the crop report soon after the official release time of noon ET on Friday. “We are performing scheduled maintenance. We should be back online shortly.”
The delay was a black eye for the USDA, which has a goal of reliable and even-handed releases of taxpayer-funded information. There were delays in the past, ranging from seconds to minutes, for the crop report to appear on USDA website after release but they drew little attention because news agencies such as Reuters, Bloomberg, and Dow Jones filed stories from a “lockup” room at USDA headquarters. Those reports circled the globe almost instantly. The USDA eliminated the lockup in August 2018, saying it would “level the playing field.”
Well-heeled trading houses with computerized trading could make millions of dollars from the news reports during the “roughly 2 seconds” between release of the crop report and its companion WASDE report and their appearance on government sites, said USDA when it shut down the lockup.
Following the delay on Friday, the USDA said several market-sensitive reports “were unavailable for approximately 10 minutes…The delay appears to have resulted from a local area network outage at the Kansas City, Missouri, site where the reports are transmitted for public release. Our Office of the Chief Information Officer is conducting a root cause analysis to diagnose the specific cause of the problem and to minimize the chances that it happens again.”
Former employees described an informal system, dating back years, of alerting the USDA’s computer wranglers to keep key networks in operation on crop report day. “On more than one occasion I had to call them up and demand they not do ‘service’ on our system right before lockup,” tweeted Seth Meyer, former chairman of the World Agricultural Outlook Board, which produces WASDE, the global equivalent of the crop report’s look at domestic production. “Not everyone” understands the importance of timely delivery of the closely followed statistical reports, he said.
The delay on Friday prompted complaints of disjointed and unfair release of the USDA data. Commodity analyst Dale Duchholz said that during the outage “some were told to go to Mann Library” at Cornell University, a repository of USDA reports. “Again, uneven access,” said Duchholz on Twitter. University of Illinois economist Scott Irwin said, “I know we received the exec summary via email before the outage ended.” The executive summary of the crop report in November lists the key figures for the fall harvest.
Due to lower yields per acre, the USDA pegged the corn crop at 13.661 billion bushels, down by 118 million bushels or nearly 1% from its October report. It would be the smallest harvest in four years. The USDA also reduced its estimate of the wheat crop by 42 million bushels, or 2%, to 1.962 billion bushels following a resurvey of six major states in the northern Plains and Northwest that grow durum and other spring wheat. The USDA double-checked the states because of later-than-usual harvests. The estimate of the soybean crop was unchanged at 3.55 billion bushels, the smallest in six years. The soybean stockpile on the Sept. 1 start of this marketing year was a record-large 913 million bushels, equal to a three-month supply.
The rainiest spring in a quarter-century prevented millions of acres of corn and soybeans from being planted this year.
Futures prices for corn rose by 2¢ a bushel on Friday but fell by 4¢ on Monday, to settle at $3.76 a bushel. Soybean futures fell by more than 13¢ on Monday after falling by more than 5¢ on Friday. When trading closed on Monday, soybeans were $9.16½ a bushel.
The crop report and WASDE are among the government’s three dozen “principal economic indicators of the United States,” a list that includes GDP, CPI, and the unemployment rate. The information in the reports is kept confidential until release time, and agencies are required to meet White House standards for accuracy. While producers and traders complain from time to time about USDA’s estimates, at the end of the day, the crop report is accepted as the foundational statement on U.S. production, partly because of USDA’s vast information-gathering network and its decades of statistical experience.
The Crop Production report is available here.
The WASDE report is available here.