The U.S. government was shutdown for more than 30 days and while there are many impacts to that, I have to admit that the only one that affects me personally is the release of USDA reports. After all, analysts need data to assess markets. However, just because the release of USDA reports ceased for a month it does not spell disaster and, certainly, the markets continue to roll along – in pretty good shape, I might add.
My point is that markets occur every day regardless of whether the activity is reported. I have said more than once over the past 30 days, it would be interesting to watch stock market activity if the traders didn’t have a news wire. At any rate, the livestock and meat markets have still been reported with the most important information – prices. The reports that we are missing are slaughter, cold storage, and cattle on feed. It may be risky to say, but, I have often commented that there are times that the industry might be better off without the cattle on feed report. The slaughter reports are important as they allow us to assess the actual flow of livestock against anticipated supply. At the end of the day, the on-feed inventory has to square with the number of cattle slaughtered. And I long ago quit trying to make the slaughter square with the cattle on feed!
I am not advocating to do away with the USDA reports. Information is part of an efficient, well-performing market. Data that provides guidance to assessing future supply and market demand (trade data in particular) is important. During January, prices have likely exceeded many expectations, particularly against the reports issued last fall. I have often commented that it is easy to over-analyze the data to the point of forecasting conditions based on information that the data is not providing. We need the reports, but at the same time, we need to keep the data in perspective as we analyze it.
The President announced the government will be reopened for at least 3 weeks and that time frame includes the Cattle Inventory Report to be released on January 31. That’s good news, but I think even without the release of some of the reports, we have established a generally sound market for this year.