Unlock the Secrets of the December WASDE Report for Grain Market Success
Corn Market Expectations
In the November WASDE report, the corn market received a boost as the USDA's yield projections and carryout numbers fell short of expectations. The national average yield was set at 183.1 bushels per acre (bpa), leading to a lower carryout number of 1.938 billion bushels. All demand estimates remained unchanged. Looking ahead to the December report, cumulative export sales are currently 39% ahead of last year, with the percentage sold for this time of the year 12% above the five-year average. Grain Market Insider experts believe that the current USDA export sales projections are too low and need to be adjusted upwards. For corn used in ethanol, demand remains robust, surpassing the pace to reach current USDA projections. Recent weeks have witnessed record and near-record ethanol production. We suspect that the current projections may be underestimated, and we expect a bump in the USDA's corn usage estimates. Such adjustments could potentially lead to a drop in 2024/2025 corn ending stocks below 1.9 billion bushels, which could be beneficial for prices.
Historical data shows that from 1993 to 2021, based on Grain Market Insider's internal research, volatility on December WASDE report day for corn tends to be positive. The December report typically closes positively about 59% of the time. In terms of outright volatility, this report ranks the least volatile. The average positive net change on report day is 0.97% (about 4¢), while the average negative net change is around 0.5% (about 2¢). These patterns provide valuable insights for market participants.
Soybean Market Outlook
Last month, the USDA shocked the soybean market by reducing 2024/2025 soybean ending stocks to 470 million bushels due to a much lower-than-expected yield estimate of 51.7 bpa compared to the market's expectation of 52.8 bpa. For the upcoming December report, Grain Market Insider experts anticipate that the yield will remain unchanged, and soybean export sales will be on track to meet the USDA's current estimates. Currently, commitments represent 64% of the current projections, which is in line with the five-year average. Soybean oil exports have been exceptionally strong, generating significant crush demand. This could be an area where the USDA makes an adjustment. If there is an increase in crush demand, it could ultimately lead to ending stocks dropping below last month's 470 million bushels, easing the supply-side burden on the balance sheet.
Statistically, for soybeans, the December report ranks slightly higher in outright volatility than corn, being the ninth most volatile among the 12 WASDE reports. In terms of bullishness versus bearishness, this report is evenly split. The average price move following the report is relatively benign, with an average positive net change of 0.91% (about 9¢) and a 0.97% (about 10¢) net change on a negative report. These patterns offer valuable perspectives for soybean market participants.
Considerations for the Wheat Market
Last month, the USDA made a minor revision to the U.S. wheat ending stocks, increasing them from 812 million to 815 million bushels. The increase was mainly due to an increase in imports and a slight rise in food use. Looking ahead to this month's report, although Grain Market Insider experts haven't heard much from the trade, recent export sales have strengthened. At the time of writing, total sales have reached 544 million bushels, which is 23% ahead of last year's sales at this time. The USDA is currently forecasting a 17% increase. While the sales pace is ahead of the five-year average of 64%, it may not be significant enough to expect any major changes. Therefore, Grain Market Insider anticipates only minor adjustments, if any, to the wheat balance sheet.
From a historical perspective, for wheat, the December WASDE report volatility ranks eleventh in net volatility among the twelve reports, with an average net change of 1.37% (about 7½¢). When analyzing positive and negative reactions, the wheat market tends to close lower 32% of the time and higher 68% of the time. Positive reactions average a 1.21% gain (about 6¾¢), while negative reactions result in a slightly larger 1.44% loss (about 8¢). These historical patterns help in understanding the potential market movements for wheat.
Disclaimer: The data presented here is believed to be reliable but cannot be guaranteed. Individuals are responsible for their own actions based on this information. Commodity trading involves significant risks and may not be suitable for everyone. Carefully consider your financial situation before engaging in such trading. Seasonal price moves or extreme market conditions are not common occurrences and should not be assumed. Futures prices already incorporate the seasonal aspects of supply and demand. No representation is made that specific strategies will guarantee success or profits. Any trading decisions are your own and not endorsed by or attributed to Total Farm Marketing.
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About the Author: Scott Masters is the editor of Grain Market Insider by Stewart-Peterson Inc. and the Director of Market Analytics at Total Farm Marketing by Stewart-Peterson. With over 30 years of grain marketing experience, including trading grain options on the Chicago Board of Trade and merchandising corn and soybeans at a local co-op in Eastern Iowa, Scott focuses on helping grain farmers manage their market opportunities and risks.