From FT Alphaville:
It’s almost like a scene from “Trading Places“, in which traders conspire to use and abuse the release of the US Department of Agriculture’s crop report.The USDA was itself a bit dubious about the acreage report in June and is resurveying this month with a scheduled Aug. 11 release date.
Except this time it’s the reliability of the report which is being questioned. Not the way it’s being traded.
As the FT’s Gregory Meyer reported:
On Tuesday the USDA said that US corn in storage would fall to 880m bushels before this year’s harvest, raising its forecast 150m bushels from last month’s estimate. That revision followed a report at the end of June that shocked markets by indicating livestock farmers had sharply rationed the corn they feed cows and swine. “Unless livestock can gain on air, I’m not sure how that number fell out. It’s a peculiar set of data that makes us leery and sceptical,” says Dan Basse of forecasters AgResource.With commodity index portfolios holding $15.6bn worth of corn futures, $13.5bn of soyabeans and almost $10bn of wheat, the USDA’s reports can have huge financial repercussions for investors. Indeed, the importance of the estimates was highlighted last week, when, according to Reuters, a senior official at Cofco, China’s state grain trader, called USDA data an “insult” that threatened “huge losses to our enterprises”.Yes. It is indeed quite something to have your data questioned by the Chinese....MORE