June crop reports from USDA often don't attract a whole lot of attention from the market because the agency typically doesn't make major changes to the month's forecasts, preferring to wait until July and August, when more data is available.
But the 2012 edition of the June report attracted considerable attention. It was the first time USDA production, supply and demand data was released while markets were open, allowing for real time trade. Rather than analyze the data for two hours, as happened in the past, traders scrambled to understand the 40-page report, which covers 18 commodities.
Computerized systems run by so-called high frequency traders, as expected had the first say. These "black boxes" can react to breaking headlines by digesting machine readable news feeds sold by information providers.
Today they clearly were way ahead of the humans. The initial ticks of July corn in the first three-hundredths of a second after the report headlines flashed took prices down two cents. But by the time 12-hundrethds of a second elapsed prices were six cents off their lows, responding to sharply higher soybean prices. Just .28 of a second after the open, futures traded in a 10 ½ cent range.
Eventually, prices fell again, trading a range of almost 25 cents in the first four minutes. Yet that type of volatility is not unusual on report days. By the time of the normal pit open at 9:30, some traders were already complaining about the quiet trade.
Overall, traders breathed a sigh of relief, but wondered if more crucial numbers – say the June 29 acreage and grain stocks or Aug. 10 supply and demand reports – could have a bigger chance for the system to break down.
There also were concerns about access to reports from USDA's website. While some reported the compete reports available right away, there were unconfirmed reports some users waited as long as 20 minutes before being able to download the data. USDA, however, said there were no problems.
"In the end, prices ended up pretty much where there were expected to following the report's release," stated Farm Futures' Market Analyst Arlan Suderman, "but antacids were at a premium during those initial minutes of price volatility for those who had 'skin in the game' with something to lose."