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WASDE Report Recap:
Friday’s USDA report was headlined by a larger than expected reduction in national average soybean yields. Yields were lowered from last month’s 53.1 BPA to 51.7 BPA – bringing it below previous record highs. Despite the seemingly friendly headline figure, corn and soybean prices were unable to maintain the immediate post-report strength. Corn production, and consequently ending stocks, were lowered in the report as a result of a modest 0.7 BPA reduction in yield estimates. Meanwhile, wheat balance sheets were bolstered by 5 million bushels on higher imports of HRS wheat.
Corn:
USDA slashed national average corn yields slashed 0.7 BPA 183.1 BPA. As a result, corn production was cut 60 million bushels to 15.1 billion bushels. The demand side of the balance sheet was left unchanged, but recent export activity has been impressive. Export sales this week were a whopping 2,767k tonnes, and sales are up 48% year-over-year. All in all, the report was not groundbreaking for corn. The inability to maintain the post-report gains was mildly concerning. Corn prices failed at the upper boundary of our 3-star resistance pocket, and proceeded to give back 3 cents. The limp into the close may push prices back to our pivot pocket between 425-426 ½ before ultimately retesting our 3-star resistance pocket again.
Wheat:
It was largely a ho-hum WASDE for the wheat complex. Aside from the 5 million bushel increase of HRS wheat for food use, there were no materially significant changes on the domestic balance sheet. Interestingly, global production estimates were increased by 0.7 million tonnes to 1,061 million due to production increases from Kazakhstan more than offsetting reductions from Argentina, Brazil, Russia, and the EU. Much has been made about the reduction in exportable wheat supplies coming out of Russia as a result of the drought conditions but that failed to materialize in today’s USDA report. Wheat prices have remained range-bound for the better part of the last month. Today’s report didn’t provide the fuel to make December wheat prices break out of the sideways trade.
Check out the full report with Tables: Grains Rally on a Bullish WASDE Report - Blue Line Futures
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