- Chicago values have shifted to mixed at midday following the USDA December Crop Report. The report tends to be a non-event for the marketplace, this year’s report did not disappoint. The pullback in Chicago futures is on profit taking as the USDA did not produce a bullish surprise in the last report of 2020.
- WASDE did not raise US 2020/21 soybean exports even though the US has sold a record 88.5% of its annual forecast through December 3. WASDE left its export forecast unchanged at 2,200 million bu. Surprisingly, WASDE raised the US 2020/21 crush estimate by 15 million bu to 2,200 million. The US crush increase was based on strong export demand for US soybean products, and the record large September/October crush pace. NOPA will be out next week with their November crush, and another record monthly record total is forecast. Currently, there is no sign of US demand rationing. WASDE will have hard choices ahead with US soybean export inspections to remain elevated into mid-February.
- US 2020/21 soybean end stocks declined 15 million bu to 175 million with the average farmgate price raised to $10.55/bu (up $0.15). We see increase in US soybean crush (not exports) as bullish as it highlights the demand struggles that are ahead. Exiting a US soybean sales export contract is not going to happen with the spread between the US/ Brazil fob values relatively tight. China is said to be bidding for US Gulf soybeans for July/August on attractive US Gulf offers. We now estimate 2020/21 US soybean end stocks at just 50 million bu, which is less than pipeline supplies of 100 million bu (92 million bu was the low stocks of 2012/13).
- WASDE cut their 2021 Argentine soybean crop estimate to by 1 million to 50 million mt while leaving the Brazilian crop at 133 million mt. WASDE (like CONAB) was loath to cut Brazilian soy production with the key reproductive period ahead. However, Brazilian sources confirm that 2020 has been one of the most challenging in modern history amid acute spring soil moisture shortages.
- WASDE made no change in the US 2020/21 corn balance sheet leaving stocks at 1,702 million bu. Although the US corn export sales pace is record large, WASDE decided to leave US corn exports at 2,650 million bu with China imports being raised to 16.5 million mt as Ukraine corn shipments to China are advancing.
- WASDE cut 2020/21 Argentine corn production by 1 million to 49 million mt while leaving Brazil at 110 million mt. This was contrary to the December CONAB estimate of 102.6 million mt, which was 7.4 million lower. World 2020/21 corn stocks fell 2.5 million to 289 million mt. China’s 2020 corn crop was left unchanged at 260.0 million mt.
- US 2020/21 wheat end stocks declined 15 million bu to 862 million on a 5 million bu cut in imports to 120 million bu, and 10 million bu hike in US wheat exports to 985 million bu. US wheat export sales suggest an annual total of 1,000 million bu, with final 2020/21 US wheat end stocks closer to 850 million bu.
- 2020/21 World wheat stocks fell 4 million to 316.5 million mt, the first fall in world wheat stocks in months. The 2020 Russian wheat crop was raised 500,000 mt to 84 million mt, while the Australian crop was pegged at 30 million mt, up 1.5 million. 20/21 Australian and Canadian wheat exports were raised 1 million to 20 million mt and 26.0 million mt, respectively. World wheat trade was increased 3 million to 193.6 million mt. Whether Russia will export 40 million mt depends on its coming export policy.
- The USDA did not provide any bullish surprises which caused Chicago futures to relax from opening gains. However, S American weather stays concerning, and any Chicago break will uncover new end user and importer buying. A lasting Chicago decline is unlikely to be sustained. A “marching” rally should unfold that pushes soybeans above $12.00 and corn above $3.30 resistance into early 2021. Few traders will want to be bearish ahead of the January crop report with US soy/corn stocks tightening.