What Farmers Need to Know Before the December WASDE Report

The December World Agricultural Supply and Demand Estimates (WASDE) report is due Tuesday, Dec. 10. Going into the report, here is some context to know for the corn, soybean, and wheat markets and what Grain Market Insider will be looking for in the updated balance sheets. 

Corn Market Expectations

The November WASDE report gave the corn market a bit of a boost as the USDA’s yield projections and carryout numbers came in below expectations. The national average yield was put at 183.1 bushels per acre (bpa), and the lower yield number contributed to the lower carryout number of 1.938 billion bushels. All demand estimates were left unchanged. 

Looking ahead to the December report, cumulative export sales are 39% ahead of last year at the time of this writing, with the percentage sold for this time of year 12% ahead of the five-year average. Grain Market Insider experts suspect that current USDA export sales projections are too low and would need to be adjusted higher. 

When looking at corn used for ethanol, demand remains high, well ahead of the pace to reach current USDA projections, with recent weeks seeing record and near-record ethanol production. Here too, we suspect that current projections may be too low and would look for a bump in the USDA’s corn usage estimates. If adjustments like these are made, it’s possible to see 2024/2025 corn ending stocks drop below 1.9 billion bushels, which could be friendly for prices.

Soybean Market Outlook

The USDA shocked the soybean market last month by dropping 2024/2025 soybean ending stocks to 470 million bushels, primarily on a much lower-than-expected yield estimate of 51.7 bpa versus the market’s expectation of 52.8 bpa. For the upcoming December report, Grain Market Insider experts expect yield will be unchanged and soybean export sales will be on pace to meet the USDA’s current estimates. Current commitments, at the time of this writing, represent 64% of the current projections, which is in line with the five-year average. 

Soybean oil exports have been very strong, generating strong crush demand, and this could be an area where the USDA makes an adjustment. If so, any adjustment to increase crush demand could ultimately drop ending stocks below last month’s 470 million bushels, making the supply side of the balance sheet a little less burdensome.

Considerations for the Wheat Market

Last month, the USDA only made a minor revision to the U.S. wheat ending stocks, increasing them to 815 million bushels from 812 million. The increase was primarily due to an increase in imports, with a slight increase in food use. 

Looking ahead to this month’s report, while Grain Market Insider experts haven’t heard much chatter as to what others in the trade are thinking, recent export sales have strengthened, and at the time of this writing, total sales have reached 544 million bushels. This is 23% ahead of last year’s sales at this time, and the USDA is currently forecasting a 17% increase. Although, when looking at the current sales pace of 66% sold, it is just ahead of the five-year average of 64%. While the sales pace is ahead of the five-year average, it may be too small to expect any changes. Therefore, Grain Market Insider anticipates only minor changes, if any, to the balance sheet for wheat.

Historical Patterns and Statistical Perspective

From a statistical perspective, based on data from 1993 to 2021, Grain Market Insider’s internal research indicates that volatility on December WASDE report day tends to be a mixed bag, with corn leaning toward more positive reactions, whereas wheat has a more negative leaning, and soybeans are split 50-50. 

For corn, the December report tends to close positively about 59% of the time. In terms of outright volatility, this report ranks the least volatile. When examining upward or downward moves, the average positive net change on report day is 0.97% (about 4¢), while the average negative net change is closer to 0.5% (about 2¢).

For soybeans, the December report ranks slightly higher in outright volatility than for corn, being the ninth most volatile of the 12 WASDE reports. In terms of bullishness versus bearishness, this report is again split, being equally bullish and bearish. Average price moves following the report also tend to be rather benign, with the average positive net change being 0.91% (about 9¢) versus a 0.97% (about 10¢) net change on a negative report.  

Lastly, 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 broken out by positive versus negative reactions, the wheat market tends to close higher 32% of the time, compared to a negative close 68% of the time. Positive reactions average a 1.21% gain (about 6¾¢), while negative reactions yield a slightly larger 1.44% loss (about 8¢).

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About the Author: Scott Masters is the editor of Grain Market Insider by Stewart-Peterson Inc., and Director of Market Analytics with Total Farm Marketing by Stewart-Peterson. Scott has over 30 years of grain marketing experience which includes trading grain options on the floor of the Chicago Board of Trade, and merchandising corn and soybeans at a local co-op in Eastern Iowa. Scott’s primary focus at Total Farm Marketing is helping grain farmers manage their operations’ market opportunities and risks.