- Following mixed but quieter trade through most of the morning, Chicago grain and oilseed markets briefly came to life with the release of the December WASDE report, but volume has been fairly light for a USDA report day. The report was not expected to offer any major changes to either the US or world balance sheets, and the USDA met those expectations with just some minor tweaking of estimates. Markets broke at the report release, but have generally traded quietly and are mixed around unchanged. The US corn balance sheet was left nearly untouched from November. The only change that was noted was an increase in the season average price forecast, which increased by 5 cents, to $3.05-3.65. In the wheat estimates, no changes were made to supply or demand forecasts. Again, the only significant change was to the season average price forecast which was raised by10 cents to $3.60-3.80.
- The USDA held demand and stocks estimates unchanged in the soybean balance sheet, but did raise the season average price forecast by 25 cents to $8.70-10.20. The largest changes in the December report were in the soybean product markets. As expected, soybean oil used for biodiesel was increased by 250 million lbs to 6,200 million The increase was a disapointment for a number of biofuel bulls, who were looking for a significant increase. Historically, the December WASDE report has done a good job forecasting annual biodiesel demand, and we continue to advise following the USDA’s lead on this very complicated topic. The WASDE report lowered the estimate for soybean meal yield, and production was thus reduced slightly from November, while exports were lowered by 200,000 short tons to 11.8 million tons.
- The December WASDE report will be the last major update from the USDA for the year, and with the report now in the rear view mirror and just two full trading weeks left in the year, S American weather will garner the trade’s attention into the January Crop Production and WASDE reports. Brazilian crops are generally in great shape, and consequently the focus will be on whether rains in the extended forecast develop for the driest parts of Argentina. Our view is that it will take significant crop shortfalls in S America to support lasting rallies.
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