The partial government shutdown entered its third week, and crucial reports were delayed.
The Supply and Demand report originally scheduled for Jan. 11 was pushed back to an undetermined time, while other government reports have been hard to come by due to lack of funding for the USDA.
With less news than normal, market analyst Jack Scoville from the Price Futures Group said two things will be affected: volume and prices.
“I think that we haven’t really realized too much of the effects just yet, but that should be a negative drag on the prices moving forward,” Scoville said. “It (also) affects your volume, and we certainly have seen some reduced volume. Part of that was due to the holidays, but part of that is because people don’t know what to do.”
He noted that the lack of demand news from reports and no export sales announcements during the shutdown are the reasons prices could start to turn down if the government doesn’t reopen.
No news also means more uncertainty for the markets, and low-volume trade could lead to extra volatility as traders focus on rumors.
“We are looking at a period with the government shut with reduced trading interest, and that can always create a more volatile situation,” Scoville said. “If one fund or another gets some type of indicator one way or another, it can create an outsized reaction.”
However, there are some positive forces hitting the U.S. grain markets, which may counteract some of the negative shutdown ideas.
Brazilian weather has been less than ideal, and after enough stress on the crop in South America, recent production estimates have been reduced. Those estimates pushed the Brazilian soybean crop below the 120 million ton mark that was being predicted a month ago. Some estimates are going as low as 115 million tons.
However, that still represents a strong crop from South America, as last year at this time, expectations were pegged at 110 million tons.
“Right now, the weather remains pretty stressful, so you’d have to say further declines are possible,” Scoville said. “I think we are just kind of learning how stressful the situation has been (in Brazil), and I don’t know if we accounted for all the problems that have seemed to surface down there.”