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USDA Reports Preview

USDA Reports Preview

USDA isn’t expected to say much in its December round of numbers, which means there’s not much to say in this month’s preview.

USDA will release its latest Crop Production and World Agricultural Supply and Demand Estimates (WASDE) reports at 11 a.m. CST Tuesday.

U.S. ENDING STOCKS

U.S. corn ending stocks are expected to decrease by about 10 million bushels (mb). Why? Good question. My guess would be a slightly larger feed demand estimate given the continued increases in USDA’s Cattle on Feed numbers. Export demand is running slow, slower than projected, and ethanol demand isn’t expected to change all that much. Maybe pre-report guessers are anticipating USDA to lower its 2017 production number. Or maybe a number from previous marketing years. All in all, it isn’t expected to matter much.

Domestic soybean ending stocks are expected to climb 20 mb, to 445 mb. But let’s be honest, USDA doesn’t have a clue regarding what soybean stocks will be on hand at the end of next August. The last four years have seen USDA lower its guess from November twice and leave it unchanged twice, all on the path to decreasing its estimate by 57% through the following September Quarterly Stocks report.

As for U.S. wheat ending stocks, big is still big, and the pre-report estimate of 941 mb is bigger than USDA’s November guess of 935 mb. No, wheat won’t turn bullish regardless of what USDA guesses in December. No, futures spreads aren’t going to magically move from a carry to an inverse — unless Santa Claus comes through for winter wheat producers early, that is.

WORLD ENDING STOCKS

USDA’s world corn guess is expected to come in at 202.7 million metric tons (mmt), down slightly from its November estimate of 203.9 mmt. It’s now the equivalent of June in South America, still too early (as we learned here in the United States last year) to make predictions of potential crop losses due to weather. Still, it would not be surprising to see a slight reduction, possibly, in Argentine production.

World soybean ending stocks are expected to be trimmed ever so slightly from USDA’s November guess of 97.9 mmt. Again, though it’s too soon to talk of a calamity in South America, it’s possible USDA “adjusts” its production estimates of either Brazil or Argentina, or maybe both. Also, keep an eye on USDA’s Chinese demand estimate, just for fun.

Will the expected whittling of world wheat stocks to 266.3 mmt from November’s 267.5 mmt cause a sharp rally in world wheat markets? I’m fairly certain you can guess my thoughts on the likelihood of that happening. Then again, we are now in winter, so it’s possible wheat market bears have gone into hibernation.

U.S. ENDING STOCKS (million bushels) 2017-2018
Dec Avg High Low Nov 2016-17
Corn 2,477 2,519 2,363 2,487 2,295
Soybeans 445 491 425 425 301
Grain Sorghum 20 23 17 19 34
Wheat 941 987 925 935 1,181
WORLD ENDING STOCKS (million metric tons) 2017-2018
Dec Avg High Low Nov 2016-17
Corn 202.7 205.0 195.7 203.9 226.6
Soybeans 97.8 99.0 95.2 97.9 96.3
Wheat 266.3 269.0 264.0 267.5 255.6
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