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Market Analysis

With issues surfacing about their zero-Covid approach, concerns about China’s economic activity impacting their commodity import demand have become an overhanging factor across the major ag markets. Murmurers are surfacing about reduced exports ahead of the USDA’s upcoming December 9^th updates. However, the USDA has not made many export changes in their December balance sheets over the past 5-6 years despite oversea demand being ahead or behind the current expectations. With no US row crop updates this month, the World Board has decided in the past to limit its demand changes until January’s final crop levels are known. Given a La Nina drought impacting Argentina’s corn & soybean crops, the USDA’s S. American updates will be important, too.

Despite this past tradition of limited US demand changes on this month’s US balance sheets, this year’s sluggish overseas corn demand on reduced Chinese purchases could prompt the World Board to reduce this demand. 2022/23’s sales being just 55% of last year’s pace at this time suggests this demand outlook could be reduced another 100 million after 225 million bu have been shaved since August. October’s US ethanol corn usage was better than expected with 2022’s corn quality possibly being lower than last year. No feed demand change is likely this month. Overall, corn’s ending stocks could rise to 1.282 billion bu vs the trade’s 1.237 bil average estimate.

This year’s soybean export sales remain ahead of last year’s pace by 5 million bu suggesting no change in this demand.

Last week’s October US crush being only 283,000 bu below 2021’s record monthly pace also doesn’t suggest any adjustment in beans’ domestic demand. Overall, no change in soybeans US ending stocks at 220 million is expected. Dryness may reduce the USDA’s Argentina bean estimate by 1 mmt while they increase Brazil’s output by 1.5 mmt to 153.5 mmt.

Wheat’s US exports have slipped below their seasonal pace to hit the USDA’s forecast. However, given Argentina’s current drought likely cutting their output by 3 mmt to 12 mmt and the US W wheat crop at historic low ratings going into dormancy suggests no USDA export or stocks change this month.

What’s Ahead:

After the Black Sea “Food Corridor” agreement was extended last month, the major grain and oilseed markets have turned sluggish despite poor Argentina and US Plains weather impacting 2023’s crop prospects. After increasing 2022/23 sales in soybeans at $14.50-14.65 and corn at $6.60- 6.70, we’ll hold the remaining 35% of these crops and wheat sales at 45% at this time.

More By This Author:

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Slightly Smaller US Corn & Soybean Crops Impacted By Varying Exports
Lower Soybean And Corn Crops Keep US Ending Stocks Historically Tight