3 Big Things Today, Dec. 10
Wheat Falls as World Output, Stocks Reach Records
Wheat futures fell overnight after yesterday’s World Agricultural Supply and Demand Estimates report showed increased global production.
World wheat output will total a record 734.9 million metric tons, the U.S. Department of Agriculture forecast, up from a November outlook for 733 million tons. This will be the third year in a row of record production, pushing stockpiles to 229.9 million tons, also the most ever.
With so much wheat in the world, it will be hard for prices to rally much, barring any weather or geopolitical incidents in the near future.
Wheat futures for March delivery fell 2 ½ cents to $4.87 ¼ a bushel on the Chicago Board of Trade. Kansas City wheat declined 2 ¾ to $4.77 ¾ a bushel. The spread between the two contracts had narrowed to less than a penny, but in the past week has again widened.
Corn and soybeans were little changed overnight after the WASDE report was a nonevent, as expected, for the commodities.
Corn futures for March delivery gained ½ cents to $3.74 ¼ a bushel on the CBOT.
Soybean futures for January delivery fell 1 ¼ cents to $8.75 ½ a bushel in Chicago. Soymeal for January delivery was unchanged at $2.77 per short ton, while soyoil fell 0.11 cent to 31 cents a pound.
With WASDE a Dud, Farmers Keep Eyes on South America
As expected, the December WASDE was a dud. Not surprising – it usually is.
Corn carryout at the end of the marketing year will total 1.785 billion bushels, up slightly from the roughly 1.77 billion bushels forecast by analysts. Soybean inventories are pegged at 465 million bushels, within the range projected by market-watchers. Domestic wheat stockpiles are seen at 911 million bushels, below the 917 million to 918 million projected by analysts.
While projections were off slightly, it wasn’t enough to warrant any big market moves.
Since it’s technically the off-season for corn and soybean growers in terms of production, they still have a lot to watch in terms of pricing.
South American weather, for one, will be critical to futures as any disruption in production in Brazil or Argentina could have consequences for world output and inventories. For now, it seems all is well for growers in both countries, where rainfall has helped improve crops in most regions, but as we’ve seen in the past, it can turn hot and dry in South America in a hurry, which is why it bears watching.
U.S. growers also will need to keep one eye on exports, or in the case of recent months, the lack thereof. So far this season, things haven’t been exactly going gangbusters in terms of purchases by overseas importers of U.S. grain.
Wheat shipments since the start of the marketing year are down 17% from the same time frame a year ago, while corn exports are off by 28%. Soybeans shipments are down 4%, according to the USDA.
Again, if something should go wrong in South America, it could lead to a frenzied buying pace by some importers who would look to the U.S. for supplies.
How this off-season shapes up will largely depend on how South American growers fare.
Comment on the USDA WASDE report on agriculture.com’s Marketing Talk at http://community.agriculture.com/t5/Marketing/bd-p/marketing.
Cold Weather Moves into Southern Plains
Colder weather is on the way for parts of the Plains starting today, which could bring some snow to the region by the weekend.
Temperatures are expected to drop rapidly throughout the rest of the week from central Nebraska south into the Oklahoma panhandle, according to the National Weather Service (weather.gov).
Along with the possibility of snow, high winds could likely make for hazardous conditions throughout the region, according to the NWS, which has issued high-wind and special-weather advisories in parts of Nebraska and Kansas.
Snowfall in the Oklahoma and Texas panhandles this week likely will leave a trace to an inch in areas, which could benefit winter wheat crops.
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