December USDA Report - Wednesday, 13 December 2017

The December USDA WASDE report was released yesterday as were the CONAB numbers on Brazilian production. The balance sheet for corn was reduced by -50 million bushels due to a +50 million increase in corn used for ethanol.  Chinese and EU corn crops were raised as was the global supply number. The soybean balance sheet saw an increase from 425 to 445 million bushels.  This adjustment came as a result of a -25 million bushels reduction in exports and a +5 million increase in seed. No changes were made to South American production. Exports from Argentina were increased from 8.0 to 8.5 MMT, Brazil exports were also raised from 65.0 to 65.5 MMT. Overall Chinese soybean imports were left unchanged and the global supply number was increased.

CONAB (a Brazilian agency similar to our USDA) numbers for Brazilian production indicated a larger soybean crop and smaller corn crop than their previous report had showed. CONAB expects the country will produce 109.2 MMT of soybeans this year which is 1.7 MMT more than their previous estimate. This estimate is below what most private firms are forecasting, most of them are predicting production near last year’s 114 MMT.  CONAB is projecting the corn crop will be 92.2 MMT which is lower than last year’s corn yield of 97.8 MMT

Immediate reaction following the WASDE report was friendly to the markets.  As the day progressed though lack of buying interest and more favorable weather outlooks for South America were both limiting factors to the forward price movement.

 

 

U.S. Ending Stocks

 

Dec. Est.

Avg. Guess

Trade Range

USDA November

Corn

2.437

2.478

2.394 - 2.517

2.487

Soybeans

0.445

0.438

0.425 - 0.486

0.425

Wheat

0.960

0.938

0.925 - 0.960

0.935

World Ending Stocks

 

Dec. Est.

Avg. Guess

Trade Range

USDA November

Corn

204.08

202.72

195.70 - 205.00

203.86

Soybeans

98.32

97.82

95.20 - 99.00

97.90

Wheat

268.42

267.07

264.00 - 270.00

267.53

South American Production

 

Dec. Est.

Avg. Guess

Trade Range

USDA November

Argentina Corn

42.00

41.77

41.00 - 42.00

42.00

Argentina Soybeans

57.00

56.52

54.00 - 57.00

57.00

Brazil Corn

95.00

93.26

86.90 - 95.00

95.00

Brazil Soybeans

108.00

108.21

107.60 - 109.00

108.00

 

F.C. Stone is reporting, “Chinese customs data showed November soybean imports at 8.68 MMT up +48% from October and up +11% from last year, with cumulative January-November imports at 85.99 MMT, up from last year’s 74.92 MMT’s pace.  Their government also pegged 2017 grain output at 617.9 MMT, up +0.3% from 616.2 MMT last year.”

There has been very little news regarding the latest round of NAFTA negotiations.  It is somewhat reassuring that Mexico has again been buying U.S. corn and exports to that destination have remained strong.  There are still concerns that the U.S. may withdraw from the deal all together which alarms all producers in the U.S.  I’ve read that most “insiders” believe that such a move would have a much bigger impact on soybean and livestock producers than on corn.  Many inside the trade are predicting a -10 to -20 drop in corn prices almost immediately and even larger declines in soybean prices if such action is taken.

Politico reports that republican lawmakers from “oil states” met with President Trump Thursday.  The lawmakers were told to work on a biofuels compromise that will benefit both gasoline makers and corn growers.  Senator Jim Inhofe said the President, “wants us to come to him with something that’s going to make both sides happy, and I believe we can do it, and believe he thinks we can do it after this meeting.” Senator John Cornyn has begun working with republican lawmakers from “corn-states” on possible solutions. Senators that attended the meeting told Politico that the EPA Administrator Scott Pruitt proposed the idea that administrative actions could reduce the costs that refiners bear to comply with the Renewable Fuel Standard.

With most of the precipitation staying to the far north much of the Midwest and Plains are continuing to see a lack of moisture.  This pattern is consistent with a La Niña pattern and something we need to continue to monitor as we move closer to 2018 and our next growing season.                           

 

The Great Lakes and Northeast are expecting another round of snowfall over the next 6-days compliments of several Alberta Clipper type storms.  The eastern ½ of the nation should expect one of the coldest Christmas’ in the last 4 years and stormy wintry weather the last week of the year according to WeatherTrends 360.

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