Typically there are very few changes to the domestic balance sheets in the December WASDE report, and this year was no different. No changes were made to the corn or soybean balance sheets from a production or consumption point of view. This left the US corn carryout at 1.49 billion bushels and the soybean carryout at 340 million bushels. Trade has been expecting a slight decrease to corn ending stocks and a slight increase on soybeans. US wheat carryout increased 15 million bushels from November and now stands at 598 million bushels as exports have slowed in recent weeks.

Only minimal changes took place to the global side of the report as well. Corn ending stocks increased 1.1 million metric tons and now stand at 305.5 million metric tons. World soybean reserves are now projected at 102 million metric tons, down 1.8 million metric tons from November. Global wheat carryout is now pegged at 278.2 million metric tons, up 2.4 million metric tons from last month. Trade was expecting lower ending stocks on the grains and a higher number on soybeans.

The only real surprise in all of these numbers was the higher world wheat figure. This is mainly from an increase in Australian wheat production of 2.5 million metric tons from last month to a new record large crop of 34 million metric tons. The USDA also increased wheat production for Russia, the European Union, Canada, and China. This takes some of the concern away from dwindling world wheat stocks, although the current stocks to use is still historically tight.

The USDA also updated its meat production estimates and data was mostly steady as well. For 2022 US beef production was left unchanged at 27 billion pounds. Pork production for 2022 was also steady from last month at 27.6 billion pounds. The USDA left its average hog price at $60.25 per hundredweight but increased its average steer value to $135.25 per hundredweight, up $5.25 from November.

The US soy complex continues to find solid demand from the domestic crush market. US crush margins are currently the highest in the past three years at nearly $2.00 per bushel. These are being supported by strong demand for US meal. While we are seeing good demand for soy oil as well, stocks of that product have started to build. This is the result of some of the highest oil content levels in this year’s soybeans in recent years. Even with elevated demand, this may start to weigh on crush margins if stocks continue to rise.

When it comes to US corn demand all attention remains on China. China was an active corn buyer last spring and summer but has been absent from the US market since August. A larger corn crop in China and uncertain feed demand has caused the decline in Chinese import buying. China has again started making import purchases but is covering needs with Ukraine supplies as they are considerably cheaper than those from the US. Trade is still confident China will return to the US for corn before the end of the year, giving us room for sales prior to the South American crop being harvested.

This commentary is the sole opinion of Karl Setzer, market adviser for AgriVisor. This is intended for informational purposes only and not to be used for specific trading recommendations. The information used to generate this commentary is gathered from a variety of sources believed to be accurate. If you have any questions or would like additional market information, feel free to contact Karl at ksetzer@agrivisor.com You can also follow Karl on Twitter via @ksetzergrains.