The Times - Serving Waitsburg, Dayton and the Touchet Valley

The existence and validity of any actively traded market depends on the flow of decisions and actions of a very large number of people. Without this minute-by-minute flow of activity from thousands of speculators, hedgers, end- users, governments and investors each trading day, the market becomes weak, fragmented and much more easily dominated by a few large entities, especially when those entities enjoy their own very wide inside network of "real-world" informa- tion sources. An entity like, say, a multinational grain mer- chandiser, or maybe a big cereal food company.

Smaller companies or individuals are at a distinct disadvan- tage in an environment without a steady flow of reliable infor- mation about what is influencing the market from sources that do not have a major interest in the impact of that information. There are private, for-profit research companies that work very diligently to gather market information, digest and analyze data and produce market projections, but they do not do this for free, nor do they provide public access to their raw data.

Markets often suffer loss of liquidity in a closed informa- tion system, raising costs and risks across the board for most traders, particularly those who cannot avoid the impact of price trendsand liquidity of given markets, such as wheat pro- ducers. We are now experiencing a taste of what such a trading environment might look like.

There is a long list of US government agencies whose job it is every day to gather and disseminate market and price in- formation to one and all without prejudice or charge. Among them are USDA's various agencies, National Agricultural Statistics Service (NASS), Foreign Agriculture Service (FAS), Risk Management Agency, Commodity Credit Corporation, Agricultural Research Service, Economic Research Servicehellip; and more.

Many of the personnel in these agencies work diligently every day gathering, sorting, categorizing, and reporting to the public (for free) vast amounts of data vital to the market decision-making of millions of people around the world. For wheat, it is Weekly Export Sales and Shipments, Crop Condi- tion Reports, and local market price reports from hundreds of locations around the country and the world, Monthly Supply and Demand reports, summaries, digests, commentarieshellip;the absence of which will be felt strongly, for good or ill, by virtu- ally every market participant in the world.

The markets will function without USDA's reports. There are some who claim that the government data has not been all that accurate or helpful in recent years, that there have been issues of integrity and timing as well as accuracy. Some may cheer at the absence of government-supplied data, but in the long run, the market is healthier, more liquid and more honest overall with the transparency that can only come from a neu- tral source of information.

The information mandate of USDA is a staggeringly com- plex and difficult job that may never be executed perfectly, but open and honest markets have very little chance to survive without it.

Wheat prices spent the last week moving upward, with Chicago December contracts Tuesday reaching the highest point since June 24, at $6.99¾. It was clear that the "psych of seven" was active Tuesday morning, as the trade turned back rather than break through the $7 mark. There is no Commodity Futures Trading Commission report this week that would help us see whether the heavy short-sold positions recently being held by the "Large Speculative" category of traders is chang- ing. The trend is upward, but the "story" supporting the move so far is a bit sketchy.

This market feels like it is about to go into another extended sideways range-bound period with the highs in the $6.90 to $7.25 area for Chicago. Kansas City looks stronger, while a big Canadian spring wheat crop will probably keep a lid on spring wheat prices. Information and opinions contained herein come from sources believed to be reliable, but are not guaranteed as to accuracy or completeness. The risk of loss in trading futures and/or options is substantial. Each investor must consider whether this is a suitable investment. When trading futures and/or options, it is possible to lose more than the full value of your account. All funds committed should be risk capital.