Initial Reaction to the USDA World Agricultural Supply and Demand Estimate (WASDE) Report
Teucrium | December 10, 2021
Top Takeaways:
1. Largely an uneventful report – typical for the December WASDE.
2. Wheat – USDA increased ending stock estimates both domestic and global - Wheat futures are trading lower
3. Merry Christmas, Happy Holidays, and Happy New Year – see you in 2022!
The Breakdown
Corn
’21-‘22 Ending Stocks
The USDA estimates ’21-’22 corn ending stocks[1] will be 1.493 billion bushels which is above the analyst estimate of 1.475 billion bushels according to Bloomberg. This is unchanged versus last month. The resulting stocks/use ratio[2] is 10%. Note the five-year rolling average stocks/use ratio is 13.54%.
Production
The USDA estimates ’21-’22 corn production will be 15.062 billion bushels which is unchanged versus last month. The yield estimate also remains unchanged at 177 bushels per acre.
Usage
The USDA estimates total corn usage of 14.830 billion bushels in the ’21-’22 crop year. This is unchanged versus last month.
Global
The USDA estimates ’21-’22 global corn ending stocks will be 305.54 million metric tons (MMT) which is above the average analyst estimate of 304.5 MMT according to Bloomberg.
Market Reaction
Front month corn futures immediately traded lower after the report was released, but reversed and ended up closing higher on the day.
Wheat
’21-‘22 Ending Stocks
The USDA estimates ’21-’22 wheat ending stocks will be 598 million bushels which is higher than the average analyst estimate of 589 million bushels according to Bloomberg. The resulting stocks/use ratio is 29.9% which is significantly below the rolling five-year average stocks/use ratio of 50.2%.
Production
The USDA estimates ’21-’22 wheat production will be 1.646 billion bushels which is unchanged versus last month.
Usage
The USDA estimates total wheat usage of 2.003 billion bushels in the ’21-’22 crop year. This number is lower versus the 2.023billion bushels estimated in the August WASDE.
Global
The USDA estimates ’21-’22 global wheat ending stocks will be 278.18 million metric tons (MMT) which is above the average analyst estimate of 276 MMT according to Bloomberg.
Market Reaction
Front month wheat futures traded lower on the day closing down 1.61%. Currently the path of least resistance is lower for wheat. There was nothing in today’s report to change the trades’ mind.
Soybeans
’21-‘22 Ending Stocks
The USDA estimates ’21-’22 soybean ending stocks will be 340 million bushels which is below the average analyst estimate of 355 million bushels according to Bloomberg. The resulting stocks/use ratio is 7.8%. The rolling five-year average stocks/use ratio is 12%.
Production
The USDA estimates ’21-’22 soybean production will be 4.425 billion bushels which is unchanged versus last month. Note that the USDA yield estimate of 51.2 bushels per acre is also unchanged.
Usage
The USDA estimates total soybean usage of 4.356 billion bushels in the ’21-’22 crop year, unchanged versus last month.
Global
The USDA estimates ’21-’22 global soybean ending stocks will be 102 million metric tons (MMT) which is below the average analyst estimate of 104.4 (MMT) according to Bloomberg.
Market Reaction
Front month soybean futures were trading lower heading into the report. Prices began heading higher on the heals of the report and ended up closely up .34%.
[1] Ending Stocks (also called carry-out): The amount of corn that will be available at the end of the crop year, given the estimated or actual beginning stocks, production, and usage.
[2] Stocks/Use Ratio: Ending stocks divided by total usage.
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