The Value of Government Information in an Era of Declining Budgets

USDA situation and outlook information contributes to the efficient operation of agricultural commodity markets. But, traders cannot adjust their price or uncertainty expectations to information that they do not have. In 2013, the USDA curtailed the publication of its crop report for the first time since the nineteenth century due to an appropriations lapse. We examine corn and soybean derivatives data around the scheduled October 2013 WASDE and find that markets for these commodities did not display characteristic patterns in terms of uncertainty resolution and price changes that are normally observed around scheduled USDA release times. We then construct the path that corn and soybean implied volatility would have taken if an average October report had been published. Although we do estimate significant announcement effects (in terms of uncertainty resolution and price adjustment) after the first report that was issued by USDA following the shutdown, we are unable to detect that it carried any enhanced effects