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Also sometimes known as a farm report or a crop and weather report, a crop report is a statistical report that includes information on such key factors as the seeding for crops, the amount of acreage that is involved in the cultivation of specific crops, and even the rate of production and ultimate yield associated with those crops. Typically, a crop report is focused on a limited geographical region and also a specific time frame. This makes it possible to use the data for a number of purposes, including projecting the impact of crop production on the prices of certain commodities and even some consumer goods.
The issuance of a crop report usually occurs under the auspices of some type of government agency. That agency may be connected with a local municipality, such as a county or a parish. This type of report may also be the product of research on the part of a state agency. In some areas of the world, a crop report is prepared that takes into account seeding, production, and yield that has to do with an entire nation.
There are several ways that the data collected for a crop report may be utilized. Government entities as well as financial analysts may use the data to determine what impact increases or decreases in the yield of certain crops will have on the cost of specific goods during upcoming economic periods. For example, if a report for the second quarter of the year indicates that the production of wheat is up considerably, this could foreshadow a decrease in the price of wheat as an investment commodity, as well as a reduction in the sale price of flour and some goods that are made using wheat as a main ingredient. Projecting this impact makes it possible to allow for those future circumstances in a manner that will help keep the economy more or less balanced.
Investors benefit from reviewing the data found in a crop report, especially when it comes to arranging futures contracts that involve cash crops like corn or wheat. This can allow investors to create a futures option that makes it possible to lock in a great price today even though the yield will not occur until a few months later. If the projection is that the price of that commodity will increase in the interim, the investor can exercise that option to buy the commodity at that locked in rate on a specified future date, then resell the commodity for a profit. At the same time, an investor can use the data in a crop report to avoid creating futures deals involving crops that are likely to have a lower market price later in the year.
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