Government Shutdown Hits Crucial Tools for Farmers, Commodity Traders

By Ryan Hanrahan

Politico’s Rachel Shin reported that “the government shutdown is creating financial heartburn for farmers across the country, stalling the delivery of farm loans, the release of critical market reports, and the Trump administration’s plans for cash bailouts.”

“Producers of row crops like corn, wheat and soybeans have for months been weathering tariff uncertainty and high input costs for things like fertilizer and machinery, while hoping that President Donald Trump will open new markets for their products or send them financial assistance, as he did during his first-term trade war with China,” Shin reported. “The absence of those things — in combination with the shutdown — has heightened concern at a time when farmers need to start making decisions about how to pay for next year’s planting season.”

“‘Every day that the government isn’t open, there’s slightly more anxiety in farm country, especially as growers are harvesting and having to pay bills and having to pay off their bank,’ Russell Williams, a Texas-based corn and wheat farmer, said in an interview,” according to Shin’s reporting. “‘There’s serious risks of farm bankruptcies this year.’”

The New York Times’ Eileen Sullivan reported that “the shutdown has also scrambled planning for American farmers, many of whom were beginning to make decisions about next year’s crops. Those plans depend on information only the federal government can provide, such as what loans and farm and conservation payments will be available and specific market data to help make decisions about what to plant.”

“Stu Swanson, who grows corn and soybeans in north-central Iowa, said that because the federal employees who work at the local Agriculture Department office are furloughed, he was not able to get a low-interest loan he counts on when planning for the coming year,” Sullivan reported. “As a result, he said he recently had to go to a bank and borrow money at a higher rate.”

“‘As we end one season, we have to already be planning the next one,’ said Joe Maxwell, a Missouri-based farmer who raises sheep and grows grains,” Sullivan reported. “‘We’re under a heck of a lot of financial stress, and now we don’t have information or the tools or programs we need to even know if there’s going to be a next year on our farm.’”

Data Blackout Affecting Commodities Trade

Reuters’ Tom Polansek, P.J. Huffstutter, and Karl Plume reported that “U.S. data vital to global grain and soybean trading has gone dark during the federal government’s shutdown, leaving commodity traders and farmers without crop production estimates, export sales data, and market reports during the peak of the autumn harvest.”

“The disruption has left growers and traders without fresh government information on the progress of the harvest and the state of the crops. The industry relies on USDA reports to price and hedge commodities from corn and soy to cattle and hogs,” Polansek, Huffstutter and Plume reported. “‘The market is just flying blind here,’ said Sherman Newlin, an Illinois farmer and analyst with Risk Management Commodities.”

“Among the halted releases are USDA’s weekly export sales report and daily sales announcements, and its monthly World Agricultural Supply and Demand Estimates (WASDE), which was due (this past) Thursday,” Polansek, Huffstutter, and Plume reported. “The supply and demand report would have provided updates on U.S. corn and soybean output and global demand while farmers haul in large crops.”

“Without those updates, investors are talking with farmers, studying satellite imagery and focusing on technical pricing movements on the Chicago Board of Trade to try to figure out what commercial grain traders and commodity funds are doing,” Polansek, Huffstutter, and Plume reported. “But the data gap has resulted in a lack of market transparency and an uneven playing field, some traders said. Major grain firms such as Cargill, Bunge Global and Archer-Daniels-Midland hold large grain inventories and proprietary data, giving them an advantage over smaller players, traders said.”

Gov’t Shutdown Hits Crucial Tools for Farmers, Commodity Traders was originally published by Farmdoc.