On Monday, January 12th, the U.S.D.A. released its January installment of the W.A.S.D.E report and heading into the report, most analysts were bearish. The report ended up showing some increased corn demand compared to the December report, which is why corn was the only grain that was green/higher by the end of the day. Specifically, corn 2014/15 ending stocks were seen at 1.877 billion bushels, 121 million bushels less than the U.S.D.A.’s forecasts a month ago. Further, yield was seen at a record of 171 bu/ac (but 2.4 less than the December report though) and an official production of 14.2 billion bushels. The change in carryout was attributed to the decreased yield and more corn being processed for ethanol, which is seen as very positive with lower oil prices. Globally, corn stocks were dropped three million tonnes to 189 million tonnes mainly thanks to increased domestic feeding.
For wheat, U.S. winter wheat acres fell more than analysts were expecting, down 1.95 million year-over-year to 40.45 million, the lowest since 2010. Soft red winter wheat (that which is traded in Chicago) saw its acreage fall by 12 per cent from last year. However, the drop in winter wheat acres are completely offset by the bearish implications of the 2014/15 ending stocks increasing by 33 million bushels to 687 million. Globally, wheat ending stocks were raised yet again to 196 million tonnes, suggesting the fundamentals remain bearish but a close eye is being kept on the Former Soviet Union states winter wheat crop.
On the soybean side of the report, a yield upgrade of 0.3 bushels per acre from the December report offset a slightly lower harvested acreage of 83.1 million acres. Accordingly production was increased by 11 million bushels to 3.969 billion while the year-end carryout stayed untouched at 410 million bushels. Most analysts were expecting to exports increased thanks to the aggressive sales so far this year but the U.S.D.A. only hiked the number by 10 million bushels to 1.77 billion, suggesting that the government agency might be expecting more South American business. However, the U.S.D.A. left South American soybean exports unchanged but did upgrade Brazil’s crop by 1.5 million tonnes to 95.5 million! World soybean ending stocks grew by almost one million tonnes to 90.8 million tonnes. Overall, the price drop in soybean contrasting the movement in the corn market suggests that more corn acres may get put in this spring than what was being estimated just a few weeks ago. The bearish implication in soybeans continue to put pressure on canola but improving basis levels suggest that demand remains relatively strong for the oilseed. That in mind, the board could quickly swing either way if any reports from Europe suggest a worse or better rapeseed crop (although a drop in production is likely already priced in).
Brennan Turner is originally from Foam Lake, SK, where his family started farming the land in the 1920s. After completing his degree in economics from Yale University and then playing some pro hockey, Mr. Turner spent some time working in finance before starting FarmLead.com, a risk-free, transparent online and now mobile grain marketplace (app available for iOS and Android). His weekly column is a summary of his free, daily market note, the FarmLead Breakfast Brief. He can be reached via email (email@example.com) or phone (1-855-332-7653).