The USDA’s World Ag Supply and Demand Estimates (WASDE) report for December sent the grain markets into sell-off mode upon its release on Friday at 12 p.m. ET.
“A lot of the report was in line with expectations,” says Brian Basting, Commodity Research Analyst with Advance Trading, Inc. However, he says the USDA’s report offered a surprise in adjusting last year’s Brazilian soybean production.
“Not only did USDA adjust the current crop size for Brazilian soybean production—in this case, two million tons smaller. However they increased last year’s crop from 2022-23 harvested last March, April, and May this year—USDA increased that crop by two million tons, and so what USDA did was they carried that two million ton increase in last year’s crop over into the carry-in supply for this crop year, so basically it offsets that smaller crop that the USDA has penciled in now for this year,” says Basting.
“Basically, it’s kind of wash there. They actually increased then Brazilian soybean exports for this crop by that two million tons and they took the carry out for this year down. The bottom line is that it surprised the trade a little bit,” according to Basting.
“The Brazilian soybean production estimate for 2022-23 is not carved in stone. We are in the midst of the next 45 days of making the Brazilian soybean crop—but it was just enough to maybe shake the markets up a little bit here and see a little profit taking on Friday,” says Basting.
In the USDA’s December report, the 2023-2024 U.S. corn outlook is calling for higher exports and lower ending stocks. Exports rose 25 million bushels to 2.1 billion, reflecting the pace of sales and shipments to date. Corn ending stocks dropped 25 million bushels to 2.1 billion. The season-average corn price is unchanged at $4.85 a bushel.
Soybean supply and use projections are unchanged from November, and the season-average soybean price forecast remains $12.90 a bushel. USDA reduced Brazil’s soybean production by two million tons to 161 million because of dry weather.
The U.S. wheat outlook is for unchanged supplies and domestic use, higher exports, and reduced ending stocks. Exports rose 25 million bushels to 725 million. All-wheat ending stocks dropped 25 million bushels to 659 million, 13 percent above 2022. The season-average farm price is up a dime per bushel at $7.30 on lower projected ending stocks.
The next USDA WASDE report is set to be released on Friday, Jan. 12, 2024 at 12:00 p.m. ET.
Click below to hear Hoosier Ag Today’s market analysis at the close of trade on Friday, Dec. 8 featuring Brian Basting, Commodity Research Analyst with Advance Trading, Inc.
