Wednesday, September 19, 2012

New market hours may cost reporters their privileged peeks at USDA's crop forecasts

The world's largest agricultural trading company, Cargill, is urging the U.S. Department of Agriculture to change a decades-old practice of giving news services, including Bloomberg and Reuters, advanced access to market crop reports and forecasts. The process, known as "lock-up," involves sequestering reporters in a room to prepare detailed stories as soon as crop reports are released by USDA.

Cargill provides market information and grain bids to farmers, and has proposed a "radical change" to this process, Gregory Meyer of The Financial Times reports. "As we understand it, the current lock-up and release process allows some members of the news media to access the reports early," Cargill said in the filing to USDA. "That has never been an issue in the past because markets were closed at release time. But in an environment in which markets are actively trading while critical reports are being released, anyone with early access will have an unfair advantage."

"Wait a minute," says Al Cross, director of the Institute for Rural Journalism and Community Issues. "Cargill seems to think that reporters will trade on this information, or share it prematurely with people who might. These journalists agree not to do that, and they should be taken at their word. There has never been an issue wiht their behavior in this regard."

The filing is a response to U.S. futures exchanges extended hours that allow trading during USDA reports, something that was previously avoided when markets took a break around the time of releases. Some say the new system prevents them from digesting facts before trading on them, Meyer reports. USDA is considering changing release times and has been accepting public comment on the matter. It may announce a decision this week. (Read more)

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