USDA’s December World Agricultural Supply and Demand Report (WASDE) typically isn’t a major market mover, and that was the case again this year. USDA released its updated report Friday, with the markets really not reacting much to the report.
Joe Vaclavik of Standard Grain said there wasn’t much to digest from the report, with one exception.
“There was one change of note and one change that was kind of expected,I think by a lot of people, myself included, USDA reduced its projection for US corn exports. And that’s something that I think was was pretty well telegraphed, given the slow pace of sales, the slow pace of shipments, that should not have been a surprise to anybody,” he says.
Other than the revision to corn exports, USDA didn’t make many adjustments this month. The highlights include:
- 2022/2023 wheat supply estimates were left unchanged.
- USDA increasing the corn ending stocks number
- Brazil’s corn and soybean crop estimates were left unchanged
- USDA didn’t revise the corn or soybean crop estimates in Argentina, either.
Vaclavik thinks changes will need to be made to South America at some point, but USDA decided to not touch those estimates in the December report.
“They’ve got some real problems there in terms of weather with drought and planting delays,” he adds. “USDA is kicking the can down the road on that one, but that’s something that I would almost guarantee is coming in January.”
Even though USDA’s December report didn’t drastically change the supply and demand balance sheets across the U.S. or around the world, Vaclavik does caution producers about one concern as 2022 draws to a close and producers shift gears to 2023.
“The big concern to me from a risk management standpoint, is that the cost of production to plant corn, soybeans and for most crops, it’s going to be record high in 2023,” he says. “And the margins, what kind of money you can make growing these crops, it still looks pretty good, even when you combine the record high input costs with the new crop delivery prices, but those new crop delivery prices are not guaranteed. Markets fluctuate and can fluctuate drastically. So, I think there’s a lot of risk associated with planting a really expensive crop. That would be my my biggest concern to kind of end the year as you start thinking about 2023.”
