Insight Focus
The December WASDE surprised grains markets with mixed signals. Corn rose in Chicago while wheat fell, with European grains also declining. Global wheat production reached an all-time high of 837.8 million tonnes, up 37 million tonnes year on year, boosting world stocks and weighing on prices.
Corn rose in Chicago last week while wheat fell. European grains also declined.
The December WASDE was a surprise for both corn and wheat. The increase in global wheat stocks was due to production rising to an all-time high of 837.8 million tonnes, up 37 million tonnes year on year, which is certainly bearish for wheat prices.
Corn, on the other hand, saw a sharp reduction in stocks, and more may still come since the USDA left yields unchanged. We think a downward revision is still likely, which should support prices. We now expect corn in Chicago to trade in a higher range of USD 4.3-4.5/bushel through Q1’25.
There are no changes to our estimate for Chicago corn, which is expected to average USD 4.18/bushel during the 2025/26 (September/August) crop, with some upside bias. The average price since September 1 is running at USD 4.24/bushel.
Global Corn Supplies Drop After December WASDE
The December WASDE, published last week, reduced US corn stocks by 125 million bushels, not due to lower yields as the market expected, but by increasing exports by exactly that figure.
World corn stocks were revised 2.2 million tonnes lower to 279.2 million tonnes due to production changes. Russia’s production was increased by 500,000 tonnes, Ukraine’s was reduced by a sizable 3 million tonnes, the EU was increased by 1 million tonnes, while Canada was reduced by 700,000 tonnes.
Source: USDA
Also on Tuesday, the Argentinian government announced a permanent reduction in export taxes to increase the inflow of dollars into the country. This is likely to lower Argentinian prices on the world market, which is bearish for prices, though the market did not react.
Coceral in Europe published its first forecast for the new crop, with corn production increasing to 58.9 million tonnes, up 1.8 million tonnes year on year.
Harvesting in Russia is 79.9% complete versus 97% last year. Harvesting in Ukraine is 83% complete. Corn planting in Argentina is 59.2% complete, with 88% in good or excellent condition, up 6 points week-on-week. Summer corn planting in Brazil is 71.3% complete versus 72.2% last year and the five-year average of 69.1%.
Wheat Prices Slide on Higher Supply
Both US and European wheat had a negative week, although Euronext wheat ended the week basically unchanged. The market had expected a reduction in global wheat stocks in the December WASDE, but they came in higher, triggering a selloff last Wednesday.
The December WASDE left US wheat carry unchanged within market expectations. World stocks increased by a sizable 3.4 million tonnes, entirely due to higher production. Argentina was revised upwards by 2 million tonnes, Australia by 1 million tonnes, Canada by 3 million tonnes, the EU by 1.7 million tonnes, and Russia by 1 million tonnes. Global demand was also increased by 4.1 million tonnes to offset some of the production increase, with the remainder contributing to higher stocks.
Source: USDA
Coceral published EU wheat production of 143.9 million tonnes, down 2.4% year on year.
US winter wheat planting is now complete, as is planting in France and Ukraine. Russian wheat planting is 99% complete versus 100% last year. Argentinian wheat is 60.2% harvested. Brazil is 98% harvested versus 98.9% last year and the five-year average of 97.8%.
A sharp drop in temperatures is expected this week in the US Great Plains and Corn Belt, along with snow. Rains are forecast for Brazil’s Centre-South, and Argentina is expected to see some rain but cold temperatures. Northwestern Europe is expected to have rain and mild temperatures, while the Black Sea region is forecast to be dry and cold.
