CORN:
US corn stocks on December 1 came in at 12.169 billion bushels versus an average trade expectation of 12.013 billion and a range of expectations from 11.07 to 12.250 billion. This was down from 10.821 billion on December 1, 2022. US 2023/24 corn ending stocks came in at 2.162 billion bushels versus 2.094 billion expected (range 1.961-2.253 billion) and up from 2.131 billion in December. Production came in at 15.342 billion bushels versus 15.212 billion expected (range 15.068-15.364 billion) and 15.234 billion in December. Yield came in at 177.3 bushels/acre versus 174.7 expected and 174.9 in December. Harvested area came in at 86.5 million acres versus 87.3 million expected and 87.1 in December. World ending stocks came in at 325.2 million tonnes versus 313.8 million expected (range 309.5-318.0 million) and 315.2 million in December. Brazilian production came in at 127 million tonnes versus 126.5 million expected (range 122.0-129.0) and 129 million in December. Argentine production came in at 55 million tonnes versus 54.8 million expected and unchanged from December.

PRICE OUTLOOK:
US grain stocks were above guesses, as were the US ending stocks numbers, and although harvested acres were cut slightly, a significant increase in 2023 corn yield of 2.4 bushels per acre was a bearish surprise. World ending stocks were well above the highest guesses on an increase in Chinese stocks, which adds to the bearishness of the report. South American production was near expectations. US ending stocks would have been more bearish after the significant jump in yield, but they were offset to some degree by increases in ethanol and feed/residual usage. The report was a clear disappointment for the bull camp.

The World Agricultural Supply and Demand Estimates (WASDE) report is prepared monthly and includes forecasts for U.S. and world wheat, rice, and coarse grains (corn, barley, sorghum, and oats), oilseeds (soybeans, rapeseed, palm), and cotton. U.S. coverage is extended to sugar, meat, poultry, eggs, and milk. USDA World Agricultural Outlook Board analysts chair the Interagency Commodity Estimates Committees (ICECs) comprising representatives from several key USDA agencies. The nine ICECs- one for each commodity- compile and interpret information from USDA and other domestic and foreign official sources to produce the report.

The ICECs rely on Foreign Agricultural Service (FAS) attaché reports and analysis of foreign commodity developments, Economic Research Service (ERS) domestic and foreign regional assessments, and National Agricultural Statistics Service (NASS) U.S. crop and livestock estimates. For domestic policy and market information, the Board relies on the Farm Services Agency and the Agricultural Marketing Service. WAOB and FAS use weather analysis and satellite imagery to monitor crop conditions. Additional private and public information sources are considered.

This broad information base is reviewed and analyzed by ICEC members who bring diverse expertise and perspectives to the report. To arrive at consensus forecasts, alternative assessments of domestic and foreign supply and use are vetted at the ICEC meetings. Throughout the growing season and afterwards, estimates are compared with new information on production and utilization, and historical revisions are made as necessary.

The WASDE reports a full balance sheet for each commodity. Separate estimates are made for components of supply (beginning stocks, imports, and production) and demand (domestic use, exports, and ending stocks). Domestic use is subdivided into major categories, for example corn for feed and corn for ethanol. Domestic use may be based on data from other Federal agencies: for example, U.S. wheat ground for flour, soybeans crushed for oil, and cotton mill use come from the Bureau of the Census. The demand side of the balance sheet may include a category for “residual” or “unaccounted” disappearance to balance known uses against total supplies.

The WASDE also reports forecast season-average farm prices for most items. Prices tie together both sides of the balance sheet. Market prices aid in rationing available supplies among competing uses. Prices also indicate potential supply responses, for example potential planting decisions for the upcoming year. The process of forecasting price and balance sheet items is complex and involves the interaction of expert judgment, commodity models, and in-depth research by USDA analysts on key domestic and international issues.

These reports present US and world supply/demand outlooks for a wide variety of agricultural products, including grains, oilseeds, cotton, pork and beef. They represent an accumulation of data on production and usage and offer projections for current/upcoming the marketing year.

The reports are released monthly, but the estimates are not necessarily revised every month. For the US data, production numbers tend to be revised during the growing season and into harvest, while demand numbers tend to be adjusted once the harvest is in and the products are marketed. The world data is adjusted every month because the data comes from many countries around the world.

Analysts focus primarily on each year’s ending stocks, as that provides a picture of whether supplies will be “tight” or “ample” at the end of the year. However, as production and consumption have been on a long term growth path for several decades, stock levels that may have been considered “ample” in years past may not be so anymore. With that in mind, analysts often prefer to use the stocks/usage ratio as a way of taking into account long term growth trends.

The world data covers individual countries as well as the entire world. Special attention is paid to the key producers, exporters and consumers. Brazil and the US together represent about 70% of global production and 85% of exports. The US, Argentina and Brazil represent 70% of global corn exports. Wheat is grown all around the world, with the US, Argentina, Australia, Canada, EU, Russia and Ukraine all major producers. India is the world’s largest producer of cotton, but the US is by far the largest exporter.

Traders will also want to keep in mind that marketing years vary from crop to crop, coinciding with the harvest. For example, wheat’s marketing year runs from June through May, cotton’s from August through July, corn and soybeans from September through August, and soybean meal and soybean oil from October through September (one month after soybeans).

The WASDE report also covers US meat production and consumption, including beef, pork and poultry. Annual production, consumption, export and stocks data is presented in the report, similar to the field crops. But this report also presents quarterly production data, which is of interest to cattle and hog traders, who track quarterly changes and compare them to previous years to gain insight as to whether the supply setup in upcoming quarters.