- The USDA’s December WASDE is often a dud in terms of new statistical data, and this year’s release failed to deviate from that trend. Protocol prevents WASDE from making changes to US production. It is too early to adjust S American yield potential. The bottom line is that the USDA has kept US and world supply and demand unchanged from previously, with the only meaningful revisions being modest boosts in 2019/20 Chinese production. Chicago futures are mixed but very little changed at midday.
- US corn and soy balance sheets were left completely untouched. US wheat imports were lowered 15 million bu. US wheat exports were raised 25 million bu. US wheat stocks were lowered 40 million.
- USDA cites a strong pace of US wheat exports to date, along with competitive fob offers. We agree with both, but key in the weeks ahead will be whether traditional buyers of US wheat front-loaded purchases during the first half of the crop year. EU wheat futures are down slightly today despite French wheat being the cheapest origin offered to Egypt.
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US End Stocks (million bu) |
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|
2018 |
Nov 2019 |
Dec 2019 |
| Corn
Soybeans Wheat |
2,114 913 1,080 |
1,910 475 1,014 |
1,910 475 974 |
- World corn stocks were raised 4.6 million mt, mostly due an upward revision to 2019 Chinese production worth 6.8 million mt. S American crop sizes were unchanged.
- World soy stocks were raised 1 million mt on a like-amount boost to Chinese production.
- World wheat stocks were raised to a new record high 289.5 million mt. 2019 Chinese production was lifted 1.6 million mt. Major exporter production was lowered a net 1.1 million mt as reductions in the S Hemisphere offset a combined 1 million mt combined hike in the EU/ Russia. Global domestic wheat use was lowered 1.4 million mt, with projected world trade down 0.87 million mt.
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World End Stocks (million mt) |
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|
2018 |
Nov 2019 |
Dec 2019 |
|
| Corn
Soybeans Wheat |
319.2 109.8 277.9 |
296.0 95.4 288.3 |
300.6 96.4 289.5 |
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World End Stocks Less China (million mt) |
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2018 |
Nov 2019 |
Dec 2019 |
|
| Corn
Soybeans Wheat |
107.9 90.4 138.1 |
100.7 76.3 142.6 |
99.5 76.2 142.0 |
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- We still looks for a 75-100 million bu cut to total US corn use within the USDA’s January release, but otherwise prevailing trends will stay intact Our broad outlook is bullish meats and vegetable oils, Malaysian palm oil stocks at the end of November totalled 2.26 million mt, down 96,000 tons from Oct and down a sizeable 750,000 tons from Nov 2018. Much smaller S American corn crops are required to tighten global grain balance sheet and stimulate meaningful fund short covering.
- The midday GFS weather forecast is wetter in Southern Argentina as well as in Mato Grosso and Mato Grosso do Sul in Central Brazil. Note that the GFS forecast maintains a needed shift to wetter weather beginning next Thurs/Fri. The arrival of rainfall late next week will also act to moderate Argentine temperatures. Yet, other models need to confirm this potential change in the coming days.
- Today’s report is rather boring even by Dec WASDE standards. US Chinese trade progress and Dec-Jan S American weather will dominate price determination moving forward, a Phase One US/China deal being the most significant bullish catalyst nearby.