Friday's December World Agricultural Supply and Demand Estimates (WASDE) report, not typically a big market mover, turned out to be just that. Other than a bump in U.S. corn exports and a revision in last year's Brazil soybean production, there were few surprises embedded within this report. The reaction, however, was clearly bearish with all three markets rebuffing early strength to head lower.

CORN

With traders expecting little change in the corn ending stocks number, the pace of corn exports encouraged USDA to raise U.S. corn exports by 25 million bushels (mb) to 2.1 billion bushels (bb), with that increased demand coming right off the ending stocks. While the resulting ending stocks number of 2.131 bb could hardly be considered bullish, as it is the highest carryout in six years, it probably also did not warrant the bearish reaction that resulted. That was the only change in a domestic balance sheet that can only be described as comfortable.

On the world side, perhaps the biggest surprise was USDA raising Brazilian old-crop corn exports by 2 million metric tons (mmt) to a record-large 57 mmt (2.24 bb) of exports for the old crop. That was likely to account for the record-large corn crop and the massive imports by China.

Other changes in the world were increases in production of 1 mmt for both Russia and Ukraine, an increase of 300,000 mt for the EU and a decrease of 1 mmt of corn production by Mexico to 25.5 mmt (1.003 bb). That would surely help account for the larger-than-normal purchases of U.S. corn by Mexico to date. Mexico imports were increased by 1.1 mmt to 19.6 mmt (771 mb). Ukraine corn exports were increased by 1 mmt to 21 mmt (827 mb). Russia's feed use for corn rose by 700,000 mt to 10.5 mmt (413 mb). World ending stocks of corn, expected by traders to fall, instead rose by a modest 200,000 mt from November to 315.2 mmt (12.4 bb).

March corn, which was trading a few cents higher prior to the report, fell to a lower close -- down 2 1/2 cents to $4.85 1/2 and nearly 7 cents below the Friday morning high.

SOYBEANS

The soybean portion of the December WASDE report was probably the least exciting. USDA chose to leave the U.S. balance sheet and ending stocks unchanged with stocks staying at a tight 245 mb.

Globally, soybean production was reduced by a modest 1.5 mmt with the drop in new-crop Brazilian production reduced 2 mmt to 161 mmt (5.91 bb) accounting for much of that. On the other side of the coin, Brazil's old crop soybean production was increased by 2 mmt to 160 mmt (5.88 bb) to account for massive exports last year. That increased the carry in stocks to 101.92 mmt (3.74 bb) despite Dow Jones analysts looking for 100.3 mmt. Brazil soybean exports for 2023-24 were increased by 2 mmt to a huge 99.5 mmt (3.65 bb) while China imports were raised by the same 2 mmt to a record-large 102 mmt (3.74 bb). Other minor changes include modest production increases in both Russia and Canada. On another note, world rapeseed production was raised by 1.4 mmt to 87 mmt, with all that gain coming from Canada and Australia. World ending soybean stocks, estimated to fall to 112.9 mmt, in fact, fell by just 300,000 mt to 114.2 mmt (4.19 bb) -- neutral.

Overall, the soybean portion of the December WASDE has to be described as neutral. Despite the neutral report, January soybeans closed down 7 3/4 cents to $13.04 and close to 17 cents below the daily high.

WHEAT

Wheat futures crumbled along with corn and soybeans after what could be termed a neutral, if not slightly friendly, WASDE report for wheat. USDA, based on the 41 mb of new soft red wheat sales announced to China this week, raised soft red exports by 30 mb and cut white wheat sales by 5 mb, leading to a 25 mb cut in U.S. ending stocks. Dow Jones traders, in the pre-report survey prior to the China purchases, had looked for no change in stocks. However, U.S. ending stocks fell to 659 mb.

On the world front, there were some notable changes, but the overall result would lead to a minimal change in world ending wheat stocks. Recent changes by Canadian and Australian governments were matched, with Canada wheat production rising by nearly 1 million tons to 31.95 mmt (1.17 bb) and Australia's wheat crop rising by 1 mmt to 25.5 mmt (938 mb) to match the ABARES forecast. Brazil production was lowered by 1 mmt to 8.40 mmt (185 mb) due to flooding at harvest, and Brazil's exports were dropped by 500,000 mt. World wheat supplies rose by 1.3 mmt. Ukraine exports were increased by a half-million metric tons to 8.5 mmt. Global consumption of wheat rose by 1.8 mmt primarily due to feed increased in Russia and southeast Asia. The net effect was a minor revision to world ending wheat stocks -- down just 500,000 mt to 258.2 mmt (9.48 bb) and the lowest since 2015-16.

Kansas City wheat was trading 4 to 5 cents higher prior to the report and finished 6 1/2 lower, with Chicago March wheat plunging 10 1/2 cents by the close and 13 cents below the daily high.

FINAL THOUGHTS

Surprising to me was USDA's failure to revise Brazil's corn production from the lofty 129 mmt estimate currently, even though Brazil's own supply company, CONAB, has that crop 10.5 mmt (413 mb) lower. There were no other major surprises in the report Friday and now traders will again focus on Brazilian weather, which is slated to take a turn for the better next week.

March corn finished report day down 2 1/2 cents to $4.85 1/2, January beans finished down 7 3/4 cents at $13.04 and KC March wheat finished down 6 1/2 at $6.61.

Dana Mantini can be reached at dana.mantini@dtn.com

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