The Export Sales Data Snafu – How Did It Affect Markets? – AgFax
On August 25, the USDA’s International Agricultural Service launched its weekly Export Gross sales Report utilizing a brand new reporting system. Based mostly on some implausible values on this report, common customers of those information started to suspect the report was inaccurate. USDA rapidly retracted the report and postponed additional export gross sales report releases. On September 1, 2022, USDA introduced it could revert to its legacy export gross sales reporting system till it may resolve its know-how points. Public reporting of export gross sales information is anticipated to renew on September 15, 2022.
The absence of normal export gross sales experiences raises not less than two questions. First, what’s the state of export gross sales for the old-crop 2021-22 and new-crop 2022-23 advertising and marketing years for corn and soybeans? USDA export gross sales information can be found as much as August 11, 2022. Late August and early September are an atypical time for export gross sales data.
Because the old-crop corn and soybean advertising and marketing yr ends on August 31, this time interval usually sees old-crop export commitments cancelled or moved from one advertising and marketing yr to the subsequent. In consequence, week-to-week modifications in old-crop export gross sales commitments are sometimes flat or adverse in late August. On the identical time, new-crop gross sales are usually giant relative to different weeks of the yr.
Based mostly on the knowledge we do have, prospects for old-crop US corn and soybean exports are blended. Corn exports are unlikely to achieve anticipated advertising and marketing yr totals if now-unobservable export gross sales commitments in late August adopted typical historic patterns. Predicting new-crop export gross sales within the absence of USDA information is harder for causes famous above.
A second, broader query pertains to the worth of getting publicly accessible USDA export gross sales information for agricultural commodity markets. What will probably be misplaced by not having export gross sales experiences launched every week?
Clearly, the shortage of export gross sales reporting doesn’t preclude exporters from arranging new gross sales. Commerce in agricultural commodities won’t stop. Neither does it remove all public data. Export Gross sales Reviews are only one information merchandise amongst many offered by USDA and different sources. Nonetheless, better uncertainty about export gross sales could generate some commerce frictions.
Previous cases the place USDA experiences weren’t launched attributable to federal authorities shutdowns shed some gentle on this query. Evaluation of these instances suggests options-implied volatility and thus the price of danger administration utilizing choices was elevated. Nonetheless, these shutdowns affected almost all USDA information merchandise which might be anticipated to have a bigger impact.
The State of US Corn And Soybean Export Gross sales
Previous-crop corn and soybean export gross sales for the 2021-22 advertising and marketing yr have each been robust, greater than the earlier 5-year common although under file ranges set within the earlier 2020/21 advertising and marketing yr. USDA’s most up-to-date World Agricultural Provide and Demand Estimates (WASDE) from August undertaking 2021/22 US exports of two,450 million bushels for corn and a pair of,160 million bushels for soybeans.
Information from the Export Gross sales Report helps market watchers confirm whether or not precise exports are prone to hit WASDE-projected ranges. These information proven in Determine 1 counsel US exports will probably attain the WASDE-projected stage for soybeans, however not for corn. Whole soybean export commitments (accrued exports to information plus excellent gross sales) have been about 2,190 million bushels or 30 million bushels above the WASDE-projected stage. Whole corn export commitments have been roughly 2,400 thousands and thousands bushels or 50 million bushels under the WASDE-projected stage.
What probably occurred within the last three weeks of the advertising and marketing yr for which information have been reported? Most remaining excellent gross sales are usually transformed to precise exports, however some beforehand introduced old-crop gross sales are canceled or postponed to the new-crop advertising and marketing yr.
The web result’s basically no week-over-week change in export commitments, as proven by the 5-year common proven in Determine 1. In some years, export commitments decline on the finish of the advertising and marketing yr. For instance, 2020/21 corn export gross sales commitments declined by about 15 million bushels within the last three weeks of the advertising and marketing yr.
Within the absence of precise export gross sales experiences from USDA, it’s unreasonable to anticipate 50 million bushels in corn export gross sales to materialize. In the meantime, 2021/22 soybean export gross sales will attain WASDE-projected ranges even when some excellent gross sales commitments have been cancelled within the last weeks of the advertising and marketing yr. The apparent limitation to this conclusion is that it assumes the current will probably be much like the previous.
New-crop export gross sales are harder to pin down within the absence of normal weekly export gross sales information. The preliminary weeks of a brand new advertising and marketing yr are usually probably the most lively instances of yr for export gross sales. As an example, the typical week-over-week change in export gross sales commitments within the first 5 weeks of a brand new advertising and marketing yr noticed between 2016 and 2020 is about 57 million bushels per week for corn and simply over 75 million bushels for soybeans.
The vary of historic outcomes throughout this era is giant. The lack of USDA export gross sales information throughout late August and early September implies better uncertainty concerning the state of export demand throughout a interval the place export demand could also be unstable.
What Is Misplaced When Export Gross sales Reviews Aren’t Reported?
The broad rationale for USDA data provision on agricultural commodity markets is as follows: higher details about provide and demand situations permits merchants to find market costs that extra precisely mirror the worth of these commodities. Extra correct costs then enhance useful resource allocation choices alongside the availability chain.
Extra correct pricing can take two broad kinds: worth ranges and worth variability. Financial evaluation has proven that the discharge of USDA experiences, particularly the month-to-month WASDE experiences, trigger noticed worth ranges to regulate, indicating that the experiences include precious details about underlying provide and demand situations. Research have additionally proven that expectations about worth variability, represented by choices costs, decline when experiences are launched.
However what occurs when this public data will not be accessible? It is a harder query to reply as a result of USDA has persistently offered public data to commodity markets for the reason that nineteenth century. Detailed information like that within the WASDE and Export Gross sales experiences has been accessible for the reason that Seventies.
Nonetheless, two latest research think about distinctive instances the place federal authorities shutdowns stopped the discharge of the October 2013 and January 2019 WASDE experiences. These research discovered no proof that corn and soybeans have been mispriced, however some indication of upper market volatility within the absence of those experiences. Particularly, decreases in options-implied volatility and choices costs that usually follows the discharge of USDA experiences was not noticed in October 2013 and January 2019.
The momentary absence of USDA Export Gross sales Reviews could have the same impression as did these lacking WASDE experiences. Nonetheless you will need to observe that export gross sales information are just one piece of market-relevant data; the WASDE report accommodates a extra complete image of commodity provide and demand. There could also be barely elevated worth volatility within the absence of export gross sales experiences over the subsequent few weeks and extra volatility on September 15 when export gross sales reporting resumes as market costs are reconciled with new information.