December USDA Report

The market did not even seem to blink today as we got USDA’s latest and greatest S&D estimates (see numbers below). The market is much more focused waiting for any information on the ongoing negotiations with the Chinese. USDA generally does not change anything on the domestic supply side and very little on the demand side on the December report and this year was no exception. The market was looking for their South American estimates which can sometimes vary although it is a bit early in their growing season.  

Soybean estimates were within the range of expectations. One thing to take note is the fact they left US exports unchanged, counting on progress between the US and China and a resolution soon. The market has remained relatively well supported in the days since the G-20 summit, but the window to export before the South American crop is closing and I do not believe this patience will last forever. We need to see Chinese purchases soon or USDA is probably going to be forced to cut US exports further adding to an already burdensome carryout. World carryouts are also building. Plan to sell soybeans aggressively on a trade deal rally!!

Very neutral report on corn. Corn has held its post G-20 gains better than any of the other commodities. It has the most friendly fundamentals to hold on to. In addition to a tightening balance sheet both domestically and world wide, there are also rumors that corn or sorghum may be purchased by the Chinese in their deal to narrow the trade deficit. This is far from certain but would be a huge help to corn if realized as we are already tighter than recent years. New crop Dec is back over $4. Have objectives in mind to get started on new crop!!! We have time and the fundamentals on our side in corn now, but as we get through winter and start looking to new crop acres, corn looks poised to pick up a significant amount of acres. 

USDA report was a little negative for wheat but it has been trading the same story for a while now. We are looking for Russia to start curbing exports but they continue to ease along. USDA lowered US exports after raising the Russian export estimate but if the market senses any slowdown in Russian exports it will react quickly.