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USDA Reports Preview          12/10 05:58

   December WASDE Typically Quiet

   USDA's December Crop Production and World Agricultural Supply and Demand 
Estimates reports probably won't shed any light on this year's harvest 
difficulties in the U.S., but could increase South America's crop estimates.

By Todd Hultman
DTN Lead Analyst

   Two weeks before Christmas, USDA is set to release its December Crop 
Production and World Agricultural Supply and Demand Estimates (WASDE) reports, 
due out at 11 a.m. CST on Tuesday, Dec. 11. The December reports probably won't 
shed any light on this year's harvest difficulties in the U.S., but could 
increase South America's crop estimates. 


   USDA's final Crop Progress report of 2018 showed 94% of the corn crop 
harvested as of Nov. 25, the last official word we have received on this year's 
harvest. Since then, we have seen winter storms across the Midwest and some 
severe weather, but also several clear days for harvest progress to be made in 
many areas. 

   Traditionally, USDA does not change its crop estimates for corn or soybeans 
in the December WASDE report, as there is no supporting help from NASS. The 
next update of U.S. corn and soybean crop estimates is set for Jan. 11 when 
USDA will also have a measure of Dec. 1 grain stocks. 

   Knowing that limitation helps us understand why Dow Jones' pre-report survey 
of analysts expects only minor tweaks to USDA's domestic numbers on Tuesday. 
U.S. ending corn stocks for 2018-19 are expected to increase slightly, from 
1.736 billion to 1.744 billion bushels (bb). The range of estimates runs from 
1.682 bb to 1.786 bb, if we ignore Western Milling's low 1.585 bb and INTL 
FCStone's high 2.058 bb estimates.

   A minor change in December's ending corn stocks estimate is not 
unreasonable. But if there is a surprise for corn, it should be to the lower 
end of the range, as ethanol production has maintained a steady pace and total 
corn export commitments are up 17% from a year ago, well above USDA's estimate 
for a 1% increase in 2018-19.

   For the world estimates, Dow Jones' survey expects USDA's estimate of 
2018-19 world ending corn stocks to increase from 307.5 million metric tons 
(mmt) to 308.4 mmt (12.1 bb) with good weather in South America possibly 
boosting crop estimates in Brazil and Argentina. If close to being true, USDA's 
estimate of world ending corn stocks will be down 12% from two years ago and 
remain a source of support for cash corn prices that are still near the lower 
end of their 10-year range. 


   As with corn, USDA's soybean crop estimate is likely to remain unchanged at 
4.60 bb, in spite of significant harvest problems since fall. Analysts in Dow 
Jones' survey are predicting a small reduction in USDA's estimate of U.S. 
ending soybean stocks, from 955 million bushels (mb) to 938 mb. If we throw out 
the low and high estimates, the range of Dow Jones' survey narrows to 830 mb to 
970 mb. 

   Judging from the lower average estimate, analysts are not expecting USDA to 
make much change in the soybean export estimate, but that is where the risk to 
soybean prices remains the most obvious. 

   The most recent export figures from USDA show total soybean export 
commitments down 33% from a year ago, still far below the 11% reduction that 
USDA is currently anticipating. At the same time, we can't become too confident 
in the extreme bearish scenario, as it is possible that the U.S. and China are 
getting closer to a workable agreement for both sides.

   The key point for soybean prices ahead is that this market continues to deal 
with a wide degree of uncertainty, depending largely on the future of trade 
with China. Meanwhile, South America's weather is giving crops a good start in 
late 2018, and we expect to see higher crop estimates for Brazil and Argentina 
on Tuesday.

   Dow Jones' survey expects USDA's estimate of world ending soybean stocks to 
increase from 112.1 mmt to 113.2 mmt (4.16 bb). Keep in mind that USDA's 
"ending stocks" figures for Brazil and Argentina are midseason measures, much 
higher than the actual ending stocks of their local seasons.


   After seeing a modest reduction in world wheat production for the first time 
in six years, the most interesting findings in Tuesday's report for wheat will 
likely be last-minute changes to any of this year's crop estimates. I can't say 
any will be large enough to rock wheat prices either direction, but a surprise 
is always possible.

   Dow Jones' survey expects USDA to increase its estimate of world ending 
wheat stocks from 266.7 mmt to 267.3 mmt (9.82 bb), still the first annual 
reduction in six years. USDA's estimate for U.S. ending wheat stocks is 
expected to increase from 949 mb to 969 mb, likely based on a slow pace of U.S. 
wheat exports that just showed a little improvement on Friday.

   The recent history of the December WASDE report has been muted for corn with 
four of the past five years resulting in report day moves of 2 cents or less. 
For soybeans, a bearish outcome is common as three of the past five years saw 
prices drop on report day, while 2015 resulted in a draw. 

   Unless USDA surprises us with a larger-than-expected change in an export 
estimate, there probably won't be much price response from Tuesday's new 
numbers, and the market's focus will likely return to the latest trade news 
once USDA's report is digested.


   Stay tuned to DTN on Tuesday for a complete report of the most important 
numbers as they become available after 11 a.m. CST. At noon CST, join DTN's 
post-report webinar where I will be explaining what the day's numbers mean for 
grain prices. Sign up for Tuesday's webinar at:

U.S. ENDING STOCKS (Million Bushels) 2018-2019
                        Dec          Avg         High          Low          Nov
Corn                               1,744        2,058        1,585        1,736
Soybeans                             938        1,033          802          955
Wheat                                969        1,025          924          949
WORLD ENDING STOCKS (Million metric tons) 2018-2019
                        Dec          Avg         High          Low          Nov
Corn                               308.4        312.0        304.2        307.5
Soybeans                           113.2        114.4        112.0        112.1
Wheat                              267.3        270.0        265.0        266.7

   Todd Hultman can be reached at 

   Follow Todd Hultman on Twitter @ToddHultman1


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