USDA will release the December WASDE report tomorrow, December 9th. While U.S. corn, soybean, and wheat production estimates will not be updated, changes to U.S. cotton and other updates to supply and demand around the world are on the table. Historically, the WASDE does not make major changes to demand estimates without also making supply updates, although small revisions are still possible.
Corn
Minor changes to the balance sheet are expected for U.S. corn. A Bloomberg poll of analysts expects ending stocks in the U.S. to decrease 8.2 million bushels from the current USDA forecast. Demand for corn remains strong on most fronts. Exports continue to blow past 2024’s record-setting pace, with ethanol also seeing strong demand. Despite these strong indicators, USDA is unlikely to make large changes at this juncture, typically choosing to wait until January to make larger adjustments.
More attention will be given to expectations in the South American crop. Analysts expect the Brazilian corn crop to be mostly unchanged from last month, up less than 1 million MT. The range of expectations varies from 130 million to 138 million MT.
Soybeans
Soybeans, like corn, will not receive any update to U.S. production this month. Analysts expect carryout in the U.S. to increase by 16 million bushels to 306 million bushels. Soybean crush has helped boost domestic demand, but most of that has already been accounted for in the current balance sheets. Export demand, especially from China, will be a determining factor in the carryout expectations for this crop year.
Brazilian soybeans are expected to increase just slightly from last month, increasing by only .4 million MT. Argentine soybeans are also estimated to be nearly unchanged, up less than .1 million MT. Total production between the two countries is expected to be 224 million MT. Weather conditions in South America have been mixed this year, with spotty rains causing some early delays in planting and germination
Wheat
U.S. wheat will receive its next major balance sheet update in January, with seedings data available. Global wheat supplies will receive an update this month, and continue to be the main story in the wheat markets. Wheat production globally is currently estimated at 774 million MT by USDA, and is likely set to increase again. Other major producers of wheat, including Australia and Canada, have released updated government forecasts that suggest higher wheat production than USDA currently reports. Strong yield reports have also come out of Argentina as a record crop continues to look likely. India is also set to increase wheat seedings for the coming season that will be one of the largest in the country’s history, per a report by Reuters. All analysts polled expected some level of increase to USDA’s current estimate for world carryout of wheat.
The big question mark for wheat is surrounding the Black Sea region. Ukraine has made it clear they will look to export as much wheat as possible amid their search for a trading destination outside the EU. But the conflict with Russia always has the potential of disrupting export flows in the area as infrastructure in the region receives collateral damage. USDA is unlikely to make changes to the WASDE to reflect this due to the ongoing conflict and uncertainty.
Cotton
U.S. cotton production is open for revision this month, with analysts expecting production to increase 36,000 bales on average. The largest swing from a November to December report was 1.1 million bales downard in 2020. On average, cotton production has decreased by 70,000 bales over the last 10 years in the December WASDE, with production shifting up five times and down another five.
Yields for U.S. cotton are currently at 919 pounds per acre, only 34 pounds off the record set in 2022. USDA rated cotton conditions in the final report of the season at 47% good to excellent, suggesting they may not want to move closer to the record yield when the final condition was 64% good to excellent..
On the demand side U.S. cotton continues to struggle with exports. Exports drive nearly 90% of the demand side of the balance sheet for the U.S., and lackluster export sales reports so far this marketing year indicate we are not on pace to meet the USDA target. Current rates of export sales indicate exports may end up closer to 11.5 million bales exported through this crop year, as shipments lag behind the pace of each of the last five years . However, USDA has been conservative recently when it comes to changing export-related demand for major crops and may not make large shifts due to the delayed export sales reports. Analysts expect exports to be decreased by 111,000 bales on average.
Globally, production is expected to increase by 862,000 bales according to the average analyst expectation. Crops have been reported to be strong across most of the central Asia growing regions outside of localized flooding issues in India. The average world price (AWP) for cotton continues to drop indicating supply remains significantly higher than demand at this time. The AWP is currently at 50.77 cents and has now fallen below the standard loan rate by 123 points.