Around midnight on Wednesday, August 11th, a group of commodity analysts will gather at a meeting site in the massive South Building of the U.S. Department of Agriculture (USDA) in Washington, D.C. Once they are assembled, the door will be locked. Cell phones will be collected. Phone and Internet lines will be disconnected. Short of a medical emergency, no one will be permitted to leave before 8:30 am.
USDA produces an estimate of world grain production, consumption, and trade by the 12th of each month. The gathered analysts will consult reports from a worldwide network of agricultural attaches, satellite images of crop vegetation, and the latest weather reports. The widely respected World Agricultural Outlook Board's report, though little known to the public, is of incalculable value to commodity traders, agribusinesses, and farmers -- some of whom stand to gain or lose fortunes on the data it contains.
At 7:00 am on Thursday, shortly after the assembled team has completed its latest monthly estimate of this year's world grain harvest, a handful of accredited agricultural reporters will be admitted and given access to the data so they can write their stories. At precisely 8:30 am the lockup will end, and phone and Internet lines will be reconnected.
All eyes will be on USDA's new grain numbers. When the last report was released on July 9th, it showed that the previously estimated 2.2 billion ton world grain harvest had dropped by 18 million tons -- a fall of nearly one percent. This month's report will incorporate the effects of a continuing record heat wave and drought on the grain harvests of Russia, Kazakhstan, and Ukraine, countries that account for one fourth of world wheat exports. The crop losses from the searing temperatures prompted Vladimir Putin's early August announcement that Russia would ban grain exports at least through December, further raising concerns about the adequacy of this year's global harvest.
During the two month span between June 9th and August 9th, the world price of wheat jumped by 66 percent. The USDA's August estimate will show the world harvest shrinking further. But by how much? And how will it affect world grain prices?