The USDA released the first WASDE (World Agricultural Supply and Demand Estimates) since September 12. Wheat prices were down four cents, corn prices were 6 cents higher and soybean prices were 30 cent higher.
The lackluster wheat and corn price moves continued Monday after the Friday report. The Kansas City December wheat futures contract price fell another 3 cents (a total of 7 cents). The CBT December corn futures price gained another eight cents. The corn price change did break the price downtrend, at least for the time being.
Slightly lower wheat prices may have been because USDA projected total wheat 2013/14 ending stocks at 565 million bushels compared to the market’s pre-release average estimate of 529 million bushels. The five-year average U.S. wheat ending stocks is 770 million bushels.
World wheat ending stocks were projected to be 6.56 billion bushels compared to the pre-release estimate of 6.49 billion bushels. The five-year average world wheat ending stocks is 7 billion bushels. Both U.S. and world wheat ending stocks were above market expectations.
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The WASDE report was bearish for wheat. While U.S. wheat stocks are marginally tight, world wheat stocks are more than adequate. Tight U.S. stocks and below average world stocks could set the stage for significantly higher wheat prices for 2014/15 wheat marketing year.
USDA’s November WASDE corn estimates were mixed. The pre-release average estimate for U.S. corn ending stocks was 2.04 billion bushels compared to USDA's estimate of 1.89 billion bushels, about 150 million bushels less than the average of the market estimates.
USDA's projected world corn ending stocks was 6.47 billion bushels compared to the prerelease average estimate of 6.11 billion bushels. USDA's estimate was about 6 percent greater than the average of the trade estimates.
The question is: "Which will carry the most weight, U.S. or world?" A $4.15 price may be a critical. If the CBT December corn contract closes below $4.15, the CBT December corn contract price may challenge $4. Prices below $4 could result in a price target of $3.67. If $4.15 holds, the price target may be $4.50.
Ending stocks for U.S. corn were lower than market expectations, mostly because of a 175- million bushel increase in projected corn exports. A problem may be that world ending stocks were 6 percent higher than expected and 8.5 percent higher than the September estimate. With higher world corn ending stocks, will U.S. corn exports reach USDA's November estimates?
The USDA U.S. soybean ending stocks estimate was 20 million bushels higher than the September estimate and 7 million bushels below the average of the pre-release estimates. The pre-release average estimate for world soybean ending stocks was 2.66 billion bushels compared to USDA's estimate of 2.58 billion bushels. With soybeans, world ending stocks trumped U.S. stocks. Also, if the market is reacting to world soybeans, they for sure didn't miss the corn estimates.
The results of the November USDA WASDE report may be that wheat prices work lower, corn prices slowly work higher, and soybean prices work higher.
Future wheat prices will be driven by Argentina and Australia’s wheat harvest, which last through December. Then the market will watch the development of the U.S. winter wheat crop.
The corn harvest is more than 75 percent complete. Corn prices will mostly be determined by export sales and shipments as will soybean prices.