CROPS

A s it is with many things these days, all of the markets - wheat, oil, stocks, metals and weather - are hyper- conscious of the effect of government activities. Some more than others, but wheat has always had a particular fond- ness for USDA statistical reports.

Contrary to common public opinion, the Department of Agriculture is not strictly set up to run the food stamp program. There is a group of highly professional and hardworking folks in Washington DC and in regional offices around the country whose responsibility it is to provide accurate counts of acre- age, export sales, planting intentions and results, inventories of grains and usage rates, and a myriad of other counted and measured facts about agriculture in the US and the world.

Imagine what it must be like to sit in an office on Capitol Hill and write reports that can hit the markets like a bomb every month, quarter and year. The intensity of interest among those to whom the markets represent their livelihood is extreme, to say the least.

There is an entire industry devoted to second-guessing the USDA's statistical reports, much like the pre and post-game analysis of football or other sports.

But this is not just sitting on-camera, making pronouncements and cracking jokes. This is a group that heavily in- fluences the group that picks up the phone and moves real money. Sometimes this actually results in pronouncements and cracked jokes, but occasionally it moves the price of wheat very quickly in a direction opposite of what had been a "generally accepted" reality just before a report. (Come to think of it, that happens in sports analysis, too!).

The surprises are not every month, but they are often enough that one can never take any USDA report day casually. If the majority of the group charged with guessing USDA's report results ahead of time - duly surveyed and reported by the me- dia - has it wrong, the price of wheat can move 20 or 30 cents per bushel in minutes, sometimes in both directions. If the trend that is in place before the report is very mature, as the seven plus-month-old downtrend currently in place for wheat is, a USDA report may set the turning point.

If this Friday's USDA report, which is mostly focused on corn and soybean planting intentions in the US, surprises the trade negatively, and the wheat price drops dramatically, historically it is likely that the event will set the annual and sea- sonal low for weeks and months to come. If there is a positive surprise, and wheat jumps up from current levels on the report, it will be a strong suggestion that the lows are already in.

Of course if the report is a non-event, statistically speaking, we will have to go on as before, waiting to see some factor to emerge with sufficient power to set the seasonal tone.

All of that is said to say this: that the wheat market is seek- ing a low of significant proportion, and that USDA reports are often triggers for such market price turns.

Information and opinions contained herein come from sources believed to be reli- able, but are not guaranteed as to accuracy or complete- ness. The risk of loss in trad- ing 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.