Home News Michigan Ag News USDA’s December WASDE. Now What?

USDA’s December WASDE. Now What?

USDA released its World Agricultural Supply and Demand Estimates on Thursday. The domestic balance sheets for corn were unchanged at a 1.7-billion-bushel carryout and a stocks-to-use ratio of 11.5 percent.

“In corn, basically its going back to everything it’s done before,” said Karl Setzer of AgriVisor, LLC.

Soybeans came as the biggest surprise on the report to Setzer and the trade on what wasn’t changed. Carryout was cut 15 million bushels to 170.5 million bushels to end marketing year 2021. That takes the stocks-to-use ratio to 3.9 percent.

“That full 15-million-bushel reduction came from crush,” said Setzer. “Crush was increased 15 million bushels in this report—no changes to exports, and we’ve seen big exports in recent weeks.”

However, flash sales, particularly to China, have been rare over the last few weeks. Setzer said there’s a growing concern because the export sales numbers weren’t increased in the December WASDE.

“The trade is starting to think [about] the soybean cancellations two weeks ago,” he said. “This week, we had China listed as a buyer, but it was shifted from the unknown to the known category. We’ve got indications the South American crop is going to be ready before too long, so that has us thinking we could see more cancellations to our soybean exports as we move forward.”

If cancellations increase or crush decreases, it’s well within the realm of possibility that the soybean carryout number could inflate.

Now that the report’s release is in the rearview, the focus now is on the last full trading week of 2020. Setzer is forecasting positioning in the market next week ahead of the Christmas holiday.

“After that, we’re more than likely going to see year-end positioning start to build, thinner trade, and not a lot of activity in the last few weeks of the year,” he said. “Cash markets can pick up a little bit as we see positioning of tax purposes, but all things considered, I think we see a little bit of a quieter trade due to the big sales we had out of the field at harvest.”

After the holidays come to an end, Setzer said the focus will soon be on the January reports which will be published January 12.