Lackluster December report from USDA

By Doug Tenney, Leist Mercantile

No changes in U.S. corn exports or U.S. ending stocks for corn, soybeans, and wheat. Can you say, “boring”? Following the report corn was unchanged, soybeans up 1 cent, and wheat up 1 cent. Before the report corn was unchanged, soybeans up 3 cents, and wheat unchanged.

This report had zero changes in U.S. 2019 corn and soybean production, yields, and harvested acres. This follows the pattern seen in past December WASDE reports.

Continuing to be dominant in the grains news cycle are the U.S./China trade talks along with ongoing weather in South America. Today their weather is a non-issue.

The major numbers traders will be watching today included U.S. corn exports and production estimates from South America. Today USDA estimated U.S. corn exports at 1.850 billion bushels. Last month they were 1.850 billion bushels. USDA pegged Brazil’s soybean production at 123 million tons and corn production at 101 million tons. Last month, USDA had the Brazil soybean production at 123 million tons while the Brazil corn production was 101 million tons.

Little changes were expected for U.S. soybeans and U.S. wheat ending stocks.

This week CONAB, Brazil’s equal to USDA estimated their soybean production at a record 121 million tons. Their corn estimate was 98.4 million tons.

Producers and traders alike have postulated for weeks if the Dec. 15 scheduled date for additional U.S. tariffs on China would take effect. A Bloomberg report this week has USDA Ag Secretary Sonny Perdue indicating no additional tariffs would take place on Dec. 15. Note with Dec. 15 falling on a weekend, anything is possible.

Next month on Jan. 10, USDA will publish final 2019 corn and soybean production, yields, and harvested acres. In addition, USDA will provide Dec. 1, 2019 grain stocks. Grain stocks fall into two categories, on farm and off farm. In recent days, USDA announced they will include unharvested corn production in the state by state on farm grain stocks. Last night the weekly crop progress report estimated the U.S. corn harvest at 92% complete. This is the final weekly crop report for this year. Due to the late planting season and resultant late harvest, the weekly crop progress reports continued beyond late November, the typical end of the weekly reports.

China’s outbreak of African Swine Fever has made headlines for nearly two years. Last month China food prices rose 19.1% due to a surge of 110% for pork. Pork is a huge staple in China’s diet. Their Lunar New Year holiday is just five weeks away. With pork a must on the menu for the feast, pork values are troublesome to its government officials. Last Friday, China dropped tariffs on U.S. pork imports as rumors swirl of potential purchases underway. U.S. pork is cheap in the world market. China purchases of U.S. pork could easily take place yet this week.

Rumors suggest China has agreed to purchase 1-2 million tons of U.S. soybeans without tariffs. With Brazil out of export supplies and harvest 5 to 8 weeks away, it appears China would need to buy U.S. soybeans in the near term.

Paramount in the U.S./China trade talks has President Trump anxious to report trade progress has been accomplished. China on the other hand wants to be respected for their views without being bullied. Surely there is a win-win for everyone just around the corner.

Barring a major surprise, the numbers today will be dismissed within 30 minutes or sooner of the noon release.

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