The October World Agricultural Supply and Demand Estimates (WASDE) and Production Report also were not prepared and released because of the shutdown. Both of these reports are watched closely by many sectors within agriculture and are used to set expectations about current and future production and use and price levels for major agricultural commodities.
However, there are private firms that prepare similar estimates. Some firms, such as large grain merchandizing companies, prepare and use their own estimates for internal use only. Other firms sell their information and estimates to clients who do not have the time or resources to prepare them.
Many of the companies that prepare their own estimates use the USDA’s information as a reference to cross-check their numbers or as direct input into their own analysis process. For example, a private grain merchandizing company may prepare yield and total production estimates for the major crops it trades by contacting farmers and grain elevators across its trade territory. However, the company may not have contacts in every state or every growing region and may not be able to gather yield information for all of the crops it merchandizes. The USDA production reports can be used to double-check their own yield estimates and fill in any missing information from other states, regions or even countries.
Why are the USDA WASDE and other production reports needed if private companies are preparing similar reports? One of the main reasons is to provide all market participants with accurate information so they can make better decisions and plan for the future. Another advantage is that the methods used by the USDA to forecast or estimate yields, acreage, total use and prices are well-documented and publicly available. Most private companies do not release the methods they used to establish their estimates and forecasts.
Many of the benefits created by the USDA reports and analysis are indirect and can be difficult to trace. It’s not until we don’t have access to this information that we realize how many different people and organizations use and rely on this information. Would agricultural markets stop working if the USDA information were not available? No, but these markets may not work as smoothly.
The people and companies that do not have access to timely and accurate information or cannot afford to pay for this information will be at a disadvantage, compared with those who do. In addition, trade only takes place when both parties can benefit from the exchange. Some trades may not take place because of poor or incorrect information, so the benefit to both parties is lost. Consistent and timely USDA reports increase the chances that mutually beneficial trades will occur and that these trades will be equitable.