Another week has gone by with no movement on reopening the U.S. government. This is keeping the grain and soybean futures market stagnant.
Not only has the government shutdown halted farm programs, it has eliminated the timely flow of information from USDA on exports, production, and many other key reports the market uses to help set the price of corn and soybeans.
As a result, traders are unwilling to move market prices because they just don’t have the data they need. Jim Bower, with Bower Trading in Lafayette, said that the longer this continues, the bigger problem it will become.
“Right now things are in limbo… where are we, and spring is not that far away.”
Bower said, without a well-functioning futures market, producers are unable to make their plans for the upcoming growing season.
“Bankers are preparing their cash flow estimates and balance sheets, and they want some answers. Right now, the way things are, we just don’t have them.”
The USDA supply and demand figures that were supposed to be released last week were delayed, leaving the market to figure things out on its own. The uncertainty over trade with China only makes this situation worse.
The shutdown is also making it harder to estimate the size of the soybean and corn crops from the Southern Hemisphere. Bower says the market is having to make guesses. “The figure of 117 MMT to about 118.5 MMT is about where most guesses are.”
Bower says, if the shutdown lasts for the next 6 months, it could be disastrous for the markets and for the producers who depend on them.