Friday’s USDA World Agricultural Supply & Demand report (WASDE) was pretty much a non-event for all commodities and it was a quiet trading session. The trade was anticipating very few changes. Over the last 20 years, the USDA has not changed the supply side of the balance sheet in the December WASDE report. The big changes come in January when “final” production estimates are released, along with December 1 stocks information which provides more information about feed usage.
The USDA did update the corn export number, acknowledging 15% of the lag in exports but the rest will probably be updated in the January report. However, they did not update China’s imports despite the country being 8.5 million metric tons behind pace with the U.S. a year ago. China’s hog markets have also fallen to 8 month lows on low demand, so the question of China’s corn demand remains.
Corn has been a follower in the market and can’t decide for itself which direction to go. The charts are concerning and longer term trends are pointed lower. Demand is lower and ethanol values have collapsed.
Wheat futures have lost nearly $2.00 in the last two months and we are now trading at levels similar to what they were before Russia invaded Ukraine in February. Wheat has had a big impact on the corn market and as wheat futures go down, corn has followed. Because of this, wheat may start to work into some feed rations in some parts of the country.
Australia is projecting a record wheat crop at 36.6 million metric tons. Grain is still moving out of Ukraine, so that risk has been taken off the table as of now. Russian wheat is still a significant discount to U.S. wheat in the world market but the difference is down to $60 a metric ton.
Soybean markets have been stronger due to concerns of the Argentina crop as well as strength in soymeal. One change that the USDA was expected to make in the December WASDE but didn’t was lowering Argentina’s crop production estimate. The La Nina weather pattern is closely related to drought in Argentina and weather forecasts continue to threaten their crop production. Argentina is matching its worst percent of production since 2000. This is significant as Argentina is the largest soymeal exporter in the world.
Grain markets will close at their regular time (12:20 p.m. MT) on Friday, December 23rd for Christmas and re-open at 7:30 a.m. MT on Tuesday, December 27th. Grain markets will close at their regular time on Friday, December 30th for New Year’s and re-open at 7:30 a.m. MT on Tuesday, January 3rd.