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USDA/WASDE Reports Seen As No Surprise

On Wednesday, the USDA raised U.S. corn carryout, leaving soybean stockpiles unchanged. Initially, the market reacted negatively at 11:00, but ended the session mostly higher. 

At the close, the March corn futures settled 1/4 of a cent higher at $3.73 3/4. January soybean futures finished unchanged at $8.76 3/4. 

March wheat futures ended 8 1/4 cents higher at $4.89 3/4.
Jan. soymeal futures closed $1.60 per short ton higher at $277.00. Jan. soyoil futures closed $0.38 lower at $31.11. 
In the outside markets, the Crude oil market is $0.07 lower per barrel, the U.S. dollar is lower, and the Dow Jones Industrials are 110 points lower.

There are a lot of little changes as the USDA keeps U.S. corn and soybean production numbers equal to its November estimates. Minimal changes in ending stocks.

Mike North, President Commodity Risk Management Group, says the USDA did very little with their November numbers in today's WASDE release.  

“December reporting showed only a 25 million bushel increase in projected ethanol usage of corn while at the same time forecasting a 50 million bushel decline in exports. Given recent trends, both of these moves were warranted and expected,” North says.  

World Wheat production was hiked in both Canada and the EU, North recognizes.  

“Despite a lot of chatter in recent weeks, Brazilian and Argentinian production numbers were left alone. That was the one wild card that remained in the market for today's report. The USDA left that card on the table.”

Today's WASDE report lowered corn exports another 50 million bushels to 1.75 billion bushels. 

Positively, the USDA raised corn used for ethanol in its December supply and demand report. 

For the full USDA numbers, see the WASDE report and the Crop Production report. 




TRADE REACTION

  • Alan Brugler, President Brugler Marketing & Management LLC, noticed tighter US and world cotton ending stocks. “Corn exports down 50 mbu as expected given slow pace of sales, U.S. ethanol bumped up 25 mbu as initial response to RFS mandate. No change in average cash price estimate for corn, beans or wheat.  Basically typical December report taking a wait and see until the Grain Stocks and final Crop Production numbers are released in January.”
  • Jack Scoville, The PRICE Futures Group Senior Market Analyst, says that the report itself seems to be mostly a yawner except for Florida oranges.  “There were no real big changes made, the corn got an unexpected boost rom more food seed and industrial and less cuts in exports than expected.  Ethanol demand up but not as much as expected.  Beans no real changes, wheat exports unchanged is the surprise, but semi expected.  Dollar very weak and supporting the markets.  The reports could easily have been more bearish and that is some support here too, a little relief that demand was not cut more.”
  • Jason Ward, Northstar Commodity Investment Co. senior grain analyst, says that the report had nothing bullish about it. “orn stocks up 25 million bushels, agree 100% with how they did it. lowered exports by 50 mil/bu which makes target more attainable (we were NOT reaching previous target) but then raised corn used for ethanol target by 25 million bushels. This also needed to be done as we are on record pace for ethanol production for 2015, higher than last year. USDA left U.S. soybean and wheat stocks unchanged. 

Regarding the world corn stocks, WASDE estimated them at 211.85 mmt down from 211.91 mmt. World soy stocks 82.56 mmt down from 82.86 mmt. World Wheat is pegged at 229.86 mmt, up from 227.30 mmt.

So, nothing bullish here. Funds are short and they will probably stay that way. Or, it wouldn’t surprise we if they added to their short positions. If prices close firmer on these figures today, it will be a disappointment to the spec community, which could lead to short-covering (a theme they started last week),” Ward says. 

  • Sal Gilbertie, Teucrium Trading owner, says that today’s report contained no surprises, with the exception of a slightly lower than anticipated upward adjustment to corn demand for ethanol, which was more than offset by a reduced U.S. corn export number. With no significant major changes, the most obvious standout in the report is the predicted record global production and usage of corn, soybeans and wheat. The growing global demand for grains seems unstoppable, which makes the markets more dependent than ever before on record or near record production levels being maintained in order to meet record annual demand levels for all grains which are now occurring year after year with regularity. Grain consumers should consider themselves lucky that farmers have been able to produce enough supply again this year to keep prices affordable. Weather patterns and price patterns will be closely linked from this point onward.
  • Matt Pierce, Futures International LLC floor trader at the CME Group, says it best. "Shockingly boring. No change in wheat, corn ending stocks were up 25 million on lower exports, and soybean ending stocks were left unchanged. World wheat production is up 2 mmt on larger production from Canada. World corn and bean output was left virtually unchanged. USDA took a punt, waiting for the January final numbers."

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