The U.S. Department of Agriculture’s latest World Agricultural Supply and Demand Estimates (WASDE) report, released on December 10, 2024, has sent ripples through the agricultural commodity markets. The report, eagerly anticipated by farmers, traders, and analysts alike, revealed substantial changes in the outlook for key crops, particularly corn, soybeans and wheat.
Corn: Bullish surprise in ending stocks
The most significant development in the report was the dramatic reduction in corn ending stocks. USDA slashed its forecast by 200 million bushels (mb) to 1.738 billion bushels (bb), a figure that fell below even the most conservative pre-report estimates. This adjustment was driven by two key factors:
Ethanol production boost: USDA increased its estimate for corn use in ethanol production by 50 mb, reflecting record-breaking weekly production rates observed in November.
Export surge: Corn exports saw a substantial upward revision of 150 mb to 2.475 bb, acknowledging the strong pace of sales and shipments to date.
These changes paint a bullish picture for corn, with ending stocks now projected to be 62 mb below the lowest pre-report trade estimate. The national average farm gate price remained steady at $4.10 per bushel.
Soybeans: Steady stocks, price adjustment
In contrast to corn, soybean ending stocks for 2024-25 were left unchanged at 470 mb. However, the USDA did make a significant adjustment to its price forecast:
The U.S. season-average soybean price forecast was reduced by $0.60 to $10.20 per bushel.
Soybean meal price forecasts were cut by $20 to $300 per short ton.
Soybean oil prices remained unchanged at 43 cents per pound.
These price adjustments reflect evolving market conditions and could impact planting decisions for the upcoming season.
Wheat: Modest reduction in stocks
Wheat stocks saw a modest decline, with USDA reducing its estimate by 20 mb to 795 mb. This adjustment, while not as dramatic as the changes in corn, still represents a slightly bullish signal for wheat markets. Notable points include:
U.S. wheat exports were raised by 25 million bushels to 850 million.
Global wheat production forecasts were lowered, with reductions in the European Union and Brazil.
Russian wheat exports were estimated at 47.0 million metric tons (mmt), down from 48 mmt in the previous report.
Global implications and market reactions
The WASDE report’s global projections have significant implications for international trade and market dynamics:
Corn: Global ending stocks for 2024-25 were revised down to 296.4 mmt, a reduction of 7.7 million tons from the previous estimate. This tightening of global supplies could support prices and potentially increase competition among importing countries.
Soybeans: World ending stocks for 2024-25 were slightly increased to 131.9 mmt, up from 131.7 mmt in November. This modest increase suggests a relatively balanced global supply-demand situation.
Wheat: Global wheat ending stocks for 2024-25 were marginally increased to 257.9 mmt, up 0.3 million tons from the previous report. However, this still represents the lowest level since 2015/16, indicating a potentially supportive environment for wheat prices.
Livestock sector impacts
The WASDE report also provided insights into the livestock sector:
Beef production forecasts for 2024 were raised slightly, but 2025 projections were decreased due to restrictions on cattle imports from Mexico.
Pork production estimates for both 2024 and 2025 were lowered due to lighter carcass weights.
Poultry production faced adjustments due to ongoing impacts of Highly Pathogenic Avian Influenza (HPAI).
These changes in livestock production forecasts could have cascading effects on feed demand and grain prices in the coming months.
Looking ahead: Factors to watch
As the agricultural sector digests the latest WASDE report, several key factors will shape market dynamics in the coming months:
South American crop progress: With the Brazilian and Argentine growing seasons underway, weather conditions and production estimates from these key exporters will be crucial.
Global economic conditions: Economic growth rates, particularly in major importing countries, will influence demand for agricultural commodities.
U.S. planting intentions: Farmers’ planting decisions for the 2025 crop year will be influenced by these latest projections and price forecasts.
Geopolitical developments: Ongoing conflicts and trade tensions could impact global trade flows and commodity prices.
Climate and weather patterns: Extreme weather events and changing climate conditions will continue to be wild cards in agricultural production and market dynamics.
