USDA Reports Preview

USDA's December World Agricultural Supply and Demand Estimates (WASDE) report is usually a mere formality, but traders will be interested to see how tight USDA says soybean supplies are in this month's report. Aside from soybean stocks, the report should look familiar to those of us here last month.

USDA will release its latest Crop Production and World Agricultural Supply and Demand Estimates (WASDE) reports at 11 a.m. CST Thursday, Dec. 10.

CORN

You may recall that last year, USDA phoned the December WASDE report in, leaving the U.S. estimates for corn and soybeans unchanged. Because there is no update of row-crop estimates from NASS in December and demand was reasonably estimated in November, there is a good chance USDA's corn estimates will stay unchanged for a second consecutive year.

Dow Jones' pre-report survey of analysts expects USDA to lower its U.S. ending corn stocks estimate from 1.702 billion bushels (bb) to 1.697 bb, a slight, but unimportant reduction. There is always a chance small tweaks will be made to feed demand, ethanol demand or export demand, but no big changes are likely for any of the three.

Dow Jones' survey expects USDA to lower its estimate of world ending corn stocks from 291.4 million metric tons (mmt) to 289.3 mmt (11.39 bb). Weather conditions in Brazil and Argentina have been drier than normal the past 60 days, but USDA may be reluctant to make a change this early in the season.

For those wondering about new U.S. crop estimates of corn or soybeans, USDA's next report on Jan. 12 is the one to watch for.

SOYBEANS

If USDA kept its estimate of U.S. ending soybean stocks unchanged on Thursday, it would be the third consecutive repeat in December, but I doubt that will happen this time -- soybean exports have been undeniably strong and deserve an upward adjustment from 2.200 bb.

According to USDA's weekly export sales report, there are 1.923 bb of soybean export sales already on the books, or 87% of USDA's export estimate for all of 2020-21. The pace of new export sales has slowed lately, but with USDA already estimating ending soybean stocks at 190 million bushels (mb), there is not much room to accommodate more export sales.

In addition, USDA's soybean crush estimate of 2.180 bb in 2020-21 is only up 0.7% from the previous year, but USDA reported actual soybean crush is up 5% in the first two months of 2020-21, also creating pressure to reduce ending stocks.

Given how tight ending soybean supplies look on paper, it is surprising soybean prices aren't trading higher than they are, but there is plenty of uncertainty yet to work through. Dow Jones' survey expects USDA to reduce its estimate of U.S. ending soybean stocks from 190 mb to 165 mb, a small adjustment that would put the ending stocks-to-use ratio below 4%, if true.

Dow Jones' survey also expects USDA to lower its estimate of world soybean stocks from 86.5 mmt to 85.5 mmt or 3.14 bb. In November, USDA estimated Brazil's local ending stocks at a slight 64 mb as of Jan. 31, 2021. Argentina's local ending stocks were estimated at 378 mb as of March 31, 2021.

WHEAT

Thursday's WASDE report may see some wheat crop estimates adjusted for 2020-21, including a 2.7 mmt increase for Australia, but the report won't have much to say about what traders are most interested in: the next winter wheat crop, now going dormant across the Northern Hemisphere.

Analysts in Dow Jones' survey don't expect many changes Thursday. USDA's estimate of U.S. ending wheat stocks is expected to slip from 877 mb to 874 mb, hardly worth mentioning. So far in 2020-21, U.S. wheat exports are roughly even with a year ago, leaving little to argue about.

USDA's estimate of world ending wheat stocks could increase more than Dow Jones' survey expects, but the official guess is that stocks will increase from 320.5 mmt to 321.5 mmt or 11.81 bb.

Aside from obvious interest in USDA's new estimate of U.S. ending soybean stocks, Thursday's report may not attract much attention, but a surprise is always possible. Join us at noon CST on Thursday for a webinar discussion of USDA's new estimates and what they will mean for prices. Questions are welcome.

Register for Thursday's webinar at: https://dtn.webex.com/…

U.S. ENDING STOCKS (Million Bushels) 2020-21
	Dec	Average	High	Low	Nov
Corn		1,697	1,825	1,550	1,702
Soybeans		165	190	113	190
Wheat		874	917	850	877
WORLD ENDING STOCKS (million metric tons) 2020-21
	Dec	Avg.	High	Low	Nov
Corn		289.3	293.0	285.0	291.4
Soybeans		85.5	86.9	83.7	86.5
Wheat		321.5	325.5	318.5	320.5

Todd Hultman can be reached at todd.hultman@dtn.com

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