Trader Time Out For USDA Reports?
Tuesday the USDA will release the April Supply Demand Report at 11:00 am. When commodities were traded in the pits at the CBOT the big USDA reports were released at 8:30 am. Then the markets were open from 9:30 am to 1:30 pm. That meant that everyone from fund managers, end users, commercial elevators to farmers had an hour to analyze the numbers and think about any positions they wanted to take.
Since the CBOT went to al all electronic platform, began the overnight session and closed the open outcry pits the USDA began releasing the reports at 11:00 am. That is right in the middle of the trading day. The result is violent swings sometimes up and back down again when the USDA numbers are a surprise. Computer programs have been developed to look for key words or phrases and then put in buy or sell orders.
Thursday there was a conference in Overland Park Kansas sponsored by the U.S. Commodity Futures Trading Commission. One academic, Charles Jones senior vice dean at Columbia University Business School proposed a pause, time out or break when a big USDA report is released. He argues a brief break would give everyone a fair chance to see the data and react.
This sure seams reasonable to me. In fact I have suggested it on the air with Gordy from Chiodo Commodities. Sure we will still have volatility. I remember USDA reports being released at 8:30 and the markets would open with a limit move at 9:30. But I still like the idea of a "time out."