The best way to describe the current state of the grain markets would be to say they have an appearance of sloppy confidence. Trade feels loose on any given day, given lack of pertinent news, but we continue to hang out at the high end of the range and within shouting distance of $6.00, $13.00, and $8.00, respectively.
Yesterday's USDA report was basically a non-event, as should have been expected, given most all December reports tend to be a non-event.
The domestic supply and demand outlook for corn and soybeans was left unchanged. As we had discussed yesterday morning, traders were expecting lower corn carryout, with a move higher in bean carryout, neither of which happened. We now look ahead to the holidays in the short-term, knowing January will bring with it final production figure updates and quarterly stocks estimates with a whole round of demand adjustments likely.
Wheat carryout came in slightly higher than expected, but with the range of pre-report expectations. At 598 million bushels, ending stocks are 15 million bushels higher than last month due to a 20-million-bushel reduction in export expectations only slightly offset by a 5-million-bushel reduction in imports. Also, interesting to note that wheat carryout was over a billion bushels here in the U.S. just 2 seasons ago.
Global figures held few surprises. The USDA made adjustments throughout the global balance sheet, though no real major changes were seen. Perhaps the biggest adjustment folks were not anticipating was a cut to Chinese bean production, which in turn dropped global ending stocks a bit more than expected, though no other major adjustments to demand were anticipated.
Outside of the WASDE figures we got updated export sales numbers from the USDA. Bean sales were again on the high side of expectations, though the overall sale amounts are starting to trend lower each week.
Traders are talking about where China is sitting from an overall import standpoint, with the idea they have around 75% of their January needs covered, with many expecting those bushels to be U.S. purchases as most of the cheap beans floating around Brazil for January shipment have already been bought up.
Corn sales were in line with expectations, though we continue to find ourselves working from record setting early season corn sales pace to a ho-hum-in line with USDA expectations-kind of pace.
Wheat export sale figures were just over half what is needed each week to meet USDA expectations, with an idea we continue to do our best to choke off any type of significant global demand until we feel more comfortable with not only this year's supply availability but also what next year could look like.
La Nina continues to dominate weather discussions in both the Southern Plains and South America as we watch Texas, Oklahoma, and Kansas struggle with incredible dryness in spots, while Southern Brazil and Argentina look to remain drier than normal for at least the next two weeks as well.
Though crop conditions still look good for the most part in Southern Brazil and Argentina, traders will be watching how we work through December and into January closely. Last year early season drought brought with it significant concern, only to see rains turn on in early January, bringing with them a near record corn crop in Argentina especially. Farmers have held off on planting the majority of their corn crop in Argentina, opting to wait for the second planting window, hoping for a repeat of last year.
Looking ahead, we will be watching outside markets closely. We've seen some pretty major moves in the wheat/corn spread as of late, possibly attracting the attention of spread traders looking to take advantage of where it has traded compared to where it should be trading.
There has been some talk recently regarding index funds and some rebalancing of positions that could push them back into the bean market, though some are wondering if the recent strength we've seen in beans could be a result of some of those folks moving a month earlier than their rebalancing deadline requires them to.
We will get some updated economic numbers today, with most folks focusing on inflation. According to economists, many expect inflationary pressures to peak Q1 of 2022, potentially meaning some of that extra cash floating around in grains is on the clock, though at this point uncertainty over supply and demand these next 12 months and beyond should keep us stout.
Corn down 1-2
Beans up 1-2