(The author is a Reuters columnist. The opinions expressed are
By John Kemp
LONDON Oct 2 If the U.S. government shutdown
continues for more than a few days, commodity markets will find
themselves flying blind, as the public servants responsible for
producing statistics on which traders and investors rely are
The Commodity Futures Trading Commission (CFTC) said Tuesday
it will not publish the commitments of traders and other market
reports during the shutdown, depriving participants in the
world's biggest derivative markets for energy and agricultural
products of price-moving information about the positions of
other producers, consumers and speculators.
The Energy Information Administration (EIA) has sufficient
funds carried over from the last fiscal year to keep operating
and will publish weekly data on physical oil and gas supplies
for the time being, but the agency's funding will run out around
October 11, according to officials, at which point publication
will have to cease.
Of 365 senior officials, other staff and contractors
employed at the EIA, only three are excepted from the furlough
and will not be sent home once the money runs out, according to
the shutdown plan published on the Department of Energy's
At the CFTC, out of 680 employees, just 28 are excepted,
enough to provide "a bare minimum level of oversight and
surveillance," as well as some whistleblower functions not
funded by annual appropriations, according to the shutdown plan
the Commission sent to the White House Office of Management and
The extent to which commodity markets rely on federal data
is hard to exaggerate. Weekly and monthly data on energy
supplies, demand and stocks from the EIA regularly move
derivative prices and provide some of the most important
real-time context for oil markets worldwide.
The CFTC's information about the positioning of market
participants is less immediately price-sensitive but helps shape
strategy for both hedgers and speculators across many energy and
agricultural markets worldwide.
All of this is now at risk. The federal government's entire
commodity data publication programme will cease if the shutdown
lasts more than about ten days. At that point, the market will
trade in a partial information vacuum.
Markets thrive on hard data - as well as rumours,
speculation and differences of opinion. An information vacuum
will tilt the balance between market participants in ways which
could sharply reduce trading volumes.
In particular, while some of the larger market participants
dealing actively in physical commodities ("insiders") may remain
confident about trading financial derivatives too, based on
their information about the underlying flows, less
well-connected participants ("outsiders") may conclude the
information asymmetry is too large and decide to scale back or
not trade at all, severely curbing liquidity.
(Editing by William Hardy)