Market Reactions to USDA Reports: State Analysis of Corn Price Response

This article reviews the current literature on USDA farm-level data reports and looks at the impact of information contained in the USDA Crop Production report on U.S., Iowa, Illinois, Nebraska, North Carolina, and Wisconsin corn prices. A hypothesis is tested concerning the significance of the reaction to the corn basis from the report. The hypothesis is tested using maximum-likelihood parameter estimates of the effect of stocks data, previous year's production number, and separate dummy variables for the August, September, October, and November release of the USDA Crop Production report on the absolute percent change of the corn basis from the month before the report is released to the month in which the report is released. Evidence is found that supports the hypothesis that USDA reports significantly affect the corn market at the national level and in Illinois, Iowa, and Nebraska. August and October are found to be the most significant month for market reactions to the report for the states affected. No evidence is found of a price reaction in the North Carolina and Wisconsin corn markets. The study period is 1949-2011.