AgriVisor Market Recap

Thursday, December 10, 2020
Futures were on the positive side ahead of the much-anticipated December WASDE report as light short covering took place. Favorable export totals and a mixed weather outlook for South America added to market support. We did see another flash sale on corn today to Mexico, this one totaling 344,442 metric tons. Wheat was supported by news Russia is likely going to limit exports to preserve domestic supplies. The data that was released in the monthly WASDE report was less supportive than expected and applied pressure to the market, mainly on corn and soybeans. 

Very few changes were made to the domestic balance sheets in the December supply and demand report. All corn data was unchanged leaving carryout at a projected 1.7 billion bu (bbu). Soybean crush was raised by 15 million bu (mbu) which cut ending stocks to a minimal 175 mbu. Even though a reduction, trade was hoping for an increase to exports as well, and the number was viewed as bearish given pre-report positioning. Domestic wheat stocks were lowered 15 mbu from a decrease in imports and higher exports, putting ending stocks at 862 mbu. 

The global balance sheet updates were also not as significant as trade was hoping for. The global corn carryout is now estimated at 289 million metric tons (mmt) which was a 2.4 mmt reduction from November. Global soybean ending stocks were lowered to 85.6 mmt from last months 86.5 mmt. The global wheat supply is expected to shrink nearly 4 mmt to a 316.5 mmt total which is still an abundant amount. The USDA left Brazil production unchanged with 133 mmt on soybeans and 110 mmt on corn but reduced each crop by 1 mmt in Argentina for totals of 49 mmt on corn and 50 mmt on soybeans. 

The USDA also updated its beef and pork production figures for 2021. US beef production is now estimated at 27.23 billion pounds, just over the November estimate for 27.22 billion pounds. Pork production in 2021 is now estimated at 28.35 billion pounds compared to 28.18 billion pounds last month. Cattle futures are projected to average $108.00 per hundredweight in 2021 and pork is predicted to average $43.25 per hundredweight. 

Ahead of the WASDE report today we had the release of the monthly Brazilian production report from CONAB. CONAB is predicting a Brazilian soybean crop of 134.5 mmt, just under their previous estimate of 135 mmt, but well above last year’s 124.8 mmt. The firm’s corn production estimate is at 102.6 mmt, down from the November projection of 104.9 mmt, but just above last year’s 102.5 mmt. While reduced from drought, both of these numbers would still be records. The most attention is on soybeans in Brazil, as corn production will be heavily impacted by the Safrinha crop which is not planted yet. 

Export sales for the week ending December 3rd were released today with favorable numbers. Corn sales were above weekly needs and at the top end of estimates with 53.6 mbu. The same was true for wheat with 22.65 mbu. Soybean sales were also high with 20.9 mbu old crop and another 6.17 mbu sold for 2021/22 delivery. Of the soybean sales, China was listed as the predominant buyer for both years. 

Meat sales were less favorable, especially for this calendar year, as interest shift to next year’s needs. Beef sales for 2020 only totaled 3,000 metric tons, a 78% decrease from last week. Beef sales for 2021 were better at 12,000 metric tons. Pork sales for this year reached 26,500 metric tons which was down 15% from a week ago. Next year’s sales totaled 6,400 metric tons. 

Now that the monthly WASDE data has been released trade will once again focus more heavily on global weather for price discovery. The La Nina remains in place and is driving global weather patterns. This will keep the drought in place in South America, even though we have seen timely rains. The timing of these rains may prevent the large crop loss that some analysts have predicted, even though the overall pattern is dry. 

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