by Stu Ellis, FarmGate Blog

Farmers who believe USDA should not be in the business of collecting statistical information about agriculture and then disseminating it to the rest of the world are getting a chance to see their wishes come true. The shutdown of the government has already halted the USDA’s Market News Service that reports daily prices from every possible commodity and market location. That, in turn, has caused disruption in some futures contracts that are based on price indexes established by the cash prices, which are not being collected. And if the shutdown flows into the weekend, the October 11^th Crop Production and Supply Demand Reports will likely have to be delayed, since the crop enumerators will have been on furlough, and not in the field collecting crop data. We’re coming close to finding out what it would be like to not have the data collection and sharing.

After taking hundreds of farmers through the USDA lock ups to watch the process of assembling spring acreage reports, the August First Crop Report, Grain Stocks Reports, and Quarterly Hogs and Pigs reports, there were always some vocal skeptics who expressed their opposition to the concept of having to report their crop data and then letting the market trade it. To them, “It just is not American!” Most were convinced otherwise by the cadre of leaders and statisticians with the National Agricultural Statistics Service, who were always quick to say that if the USDA did not provide that service for everyone, farmers and the market included, and then only the market could afford to collect its own data that would not be shared with farmers.

Kansas State University marketing specialist Dan O’Brien makes a similar statement when he postulates what might happen if USDA reports were sharply curtailed, as they are now with the government shutdown. He says:

1) Grain producers and users would be paying a much more attention to basis and cash price trends at various upstream and downstream locations in the U.S. and world grain marketing system – along with any arbitrage opportunities that may exist from transportation of grain.

2) The market would also be more closely attuned to grain futures carrying charges and the general structure of futures prices as signals of whether to hold and store grain or to “sell now”.

3) Technical market analysis would probably be relied upon more heavily – as ag producers with crops to sell turn as well as users of grain with needs to fulfill would be looking wherever they can for guidance on what to do to fulfill their respect needs.

He says currently the USDA “crowds out” other data collection firms, which would spring up and fill the void if the USDA was not there.  But there would be a host of different companies providing different services, in different areas, and their collective data could not be reconciled or merged to provide a single database that would be available for historical comparison.

O’Brien adds, “To the degree that grain markets would be more vulnerable to the withholding of cash price or local production information by major local/regional market participants – then market performance and efficiency could suffer.” And he questions that while the void would be filled by small private firms, would the “public good” that USDA serves ever be filled for the benefit of small to medium-sized farmers.

Agreeing with O’Brien is Farm Progress economist John Otte who says, “An extended government shutdown will introduce inefficiencies in the agricultural commodity price discovery mechanism. Sketchy data on cash market prices will diminish market transparency. Futures traders will have more difficulty getting reality checks from cash market transactions.” He says farmers will be able to use futures and options, but without the timely data from USDA, when would you really know to do that?

Otte believes that without the USDA’s regular data collection, basis relationships will deteriorate and uncertainty would drive cash prices lower, causing producers to re-evaluate their risk management strategies. He says the threat of delivery with a futures contract would always cause futures and cash to converge, regardless whether one was too low or to high.

But Otte says lean hog futures and feeder cattle futures would be in trouble. The lean hog futures settle against a two-day moving average which is calculated from data collected by USDA. The feeder cattle index is based on a seven-day moving average also collected by the USDA. With the shutdown of the Market News Service, those indexes cannot be calculated and the futures contract does not have a basis for value.

Otte quoted agricultural marketing consultant Michael Cordonnier who said if you do not know the data, you sit on the sidelines. Farmers who need to market a crop to make a cash rent payment by the end of the year can hardly afford to sit on the sidelines.

Summary:

With the halting of government operations, the USDA data collection process is also halted and that will prevent dissemination of that data as well. The lack of certain information can be disruptive to the markets, creating problems for those who buy and sell with futures market trades. Farmers may also have problems determining the timing of their marketing decisions without good knowledge of the supply and demand for commodities. While the USDA shutdown will hopefully not be long, the data collection and dissemination hiatus is a good indication of what would happen should the service not be available as opponents have suggested.

A 9-year-old boy has drowned and his twin brother was in serious condition at a St. Louis hospital after an incident in a hotel’s indoor swimming pool near downtown.

Police declined to release names of the two boys but did confirm one had died and the other was hospitalized.

Police say the boys were in the pool area with other family members, including their mother and a 14-year-old brother.

The case is under investigation.

(AP) — A 5-year-old girl has died and a firefighter who tried to save her suffered second-degree burns to the face after a house fire in Kansas City, Kan.

The fire was reported just after 4 a.m. Sunday, and when emergency crews arrived they found heavy flames coming from the rear and center sections of the home.

The girl was found in or near a bedroom at the back of the house, which had no smoke detectors. A woman and a 7-year-old girl escaped and were taken to an area hospital for evaluation.

The name of the victim and other occupants weren’t released pending notification of relatives. The cause remains under investigation.

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New research by the U.S. Geological Society suggests that while the

hasn’t produced a major earthquake in more than 200 years, the risk remains.

Scientists used new technology to develop high-resolution imagery of the seismic zone centered around New Madrid, Mo. The imagery allows for more detailed mapping, showing weak rocks in the zone that are found at deeper depths in the Earth’s mantle compared to surrounding areas.

The seismic zone produced massive earthquakes, including three greater than magnitude 7, in 1811 and 1812. The quakes were so strong that the Mississippi River reportedly flowed backward and church bells rang as far away as New England.

Charles Langston, director of the Center for Earthquake Research and Information at the University of Memphis, said at least 200 earthquakes occur in the seismic zone every year, but most are very small. He said there is a 7-10 percent chance of a magnitude 7.5 or larger quake in the zone in the next half-century, and a 25-40 percent chance of a magnitude 6 quake or larger in the same period.

“So there’s a good chance we could have a damaging quake in the next 50 years,” Langston said.

The USGS scientists used data from USArray, a network of 400 seismometers that is part of the National Science Foundation’s EarthScope Program. A surprising finding was that weak rocks underlie the fault lines in the crust of what is known as the Reelfoot Rift area of the seismic zone and extend more than 100 miles down into the mantle _ far deeper than in other ancient rift zones in the central and eastern U.S.

The weak mantle rocks have low seismic velocity, which means they are more susceptible to concentration of tectonic stress and more mobile.

USGS scientists in the future plan to use USArray to map the seismic structure of the entire nation. The effort started in California in 2004. It will next focus on the East Coast, then Alaska.

The Morgan County treasurer has been awarded more than $93,000 after a judge found that she had wrongly been paid less than other officials in the central Missouri county for eight years.

The  recent judgment for Treasurer Louella Pryor came in a back-pay lawsuit she filed in April 2012.

 Retired Howard County Judge Ralph Jaynes ruled that Pryor was owed eight years of back pay after receiving just 74 percent of the state-mandated maximum salary. During that time, Pryor said, the county’s other elected officials received 100 percent of the state-mandated level.

For Pryor, the difference translated to an annual salary of $33,300 instead of $45,000.

The judgment awarded Pryor the difference in pay for those years, with interest. The county commission also was ordered to make contributions to Pryor’s retirement plan based on the higher salary.

Jaynes handled the case because Morgan County Circuit judges Stan Moore and Ken Hayden recused themselves.

The salary dispute dates to decisions made years ago.

In 1997, the Morgan County Salary Commission set the pay for each elected official at 100 percent of what was then the state’s maximum limit. When Morgan County’s assessed property valuation exceeded $300 million in 2001, the county was put into a different category for salaries, and all the officials except the treasurer got a raise in 2002.

When Pryor took office in 2003, a state law allowed county treasurers’ salaries to range from $33,300 to $45,000. But the law was changed later that same year, meaning Pryor’s pay should have been set at $45,000, the judge said.

The average U.S. price of a gallon of gasoline has dropped 14 cents over the past two weeks.

The Lundberg Survey of fuel prices released Sunday says the price of a gallon of regular is $3.38.

Midgrade costs an average of $3.58 a gallon, and premium is $3.71.

 Diesel was down 4 cents at $3.92 gallon.  Northwest Missouri Area Average for for regular is $3.014

Of the cities surveyed in the Lower 48 states, St. Louis has the nation’s lowest average price for gas at $3.01. San Francisco has the highest at $3.88.

In California, the lowest average price was $3.74 in Sacramento. The average statewide for a gallon of regular was $3.83, a drop of 14 cents.

(AP) — Kansas City police say a shootout between two vehicles on the city’s east side has left one person dead and three others wounded.

Officers were responding to a reported shooting shortly before 10 p.m. Friday when they found a car that had been involved in an accident. When they approached the vehicle, they found a man and woman who had been shot.

Another victim was found at the scene where the officers had been sent, and a fourth victim was dropped off at a hospital.

A female was pronounced dead at a hospital.