Dec 6 / Alef Dias e Pedro Schicchi

Pre-WASDE Monthly Report - 2023 12 06

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"Perspectives for the USDA's December report"

Soybeans: small changes are expected in the US, but what about South America?

Figure 1: Brazil Soybean – Production (M ton)

December is usually a quieter report on USDA’s part. The adjustments on the supply side of the US balance are done for the year and we will only get the final numbers in January. Historically, demand-side changes have also been less frequent in December. For this month, the market estimates no changes in the US ending stocks.

The main question mark for Friday’s (8) report is the Brazilian production. The market has already been pricing a smaller production due to the poor start that crops had – despite the recent improvements. However, the issue is that estimating the crop is different from estimating what the USDA will do.

Over the last 10 years, the agency never changed Brazil’s production in December. As such, although we agree with the view that the country’s production should be smaller than 163, the market may be disappointed on Friday.

Corn: a similar story

Figure 2: Brazil Corn – Production (M ton)

As is often the case, corn is in a similar position. Changes in the US balance in December are not as frequent as in previous months and are focused on the demand side. The market also estimates no change in the American corn stocks this month.

However, there is the expectation that the agency will cut Brazil’s 23/24 production by 1M ton. However, as in soybeans, changes in Brazilian corn production in Dec have been the exception over the last 10 years - having only taken place once, in 16/17. This opens the possibility for the market to be disappointed on the day of the report.

Not many changes are expected in Ukraine’s figures. The exporting pace was good in November, but the recent weather challenges in the Black Sea may avoid an upward review.

Wheat: world stocks keep getting tighter as dryness reigns in the south

Figure 3: World Wheat - Ending Stocks (M mt)

In wheat, a calm WASDE seems to be on the way. As harvest advances in the Southern Hemisphere, there’s less room for adjustment in Australia’s and Argentina’s estimates.

Compared with local agencies’ estimates, the marginal adjustments in both countries may offset each other – Argentina may have a 1.5M cut while Australia may see a 1M ton upward review to its output.

Additionally, Canada’s production can also be raised, given Statcan’s final numbers released this week. Russia’s export figures are also something to watch – the exporting pace dipped in the last few weeks due to the poor weather in the Black Sea.

The market is not expecting much change in the US’ balance, but export figures may be raised, given the surprisingly high volume in the last export sales.

Charts Legend

WASDE Commentary — Grains

Written by Alef Dias

Written by Pedro Schicchi
Reviewed by Thaís Italiani


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