WASDE was released today at 11 AM. Here are the results:
Below is a video version of my view on WASDE, if that is your speed.
HIGHLIGHTS
- Corn production was left pretty much unchanged near 1.8 billion. Anything below 2.0 billion at the end of the year and I think corn is a buy here in Dec 15.
- Corn Yields were left as is (for now) while harvested acres fell from 84.3 to 83.8 million acres.
- Corn Feed usage dropped from 5.300 billion down to 5.175 billion bushels, a reduction of 125 million bushel in demand. New crop feed usage lowered from 5.250 billion down to 5.200 billion, a reduction of 50 million bushels. The result of this was a higher new crop carryover as supplies from this year are added to next year.
- The USDA lowered to the average corn prices for this year to between $3.65 and $4.35
- Chinese corn imports lowered from 4.0 MMTs down to 3.5 MMTs. I don’t see this as a big price mover, but I think over the long term lower Chinese corn imports are not what we want to see at this point in the season.
- Wheat ending stocks come in much higher than the trade was anticipating. This was the most bullish part of the report. Harvested acres were taken up from 45.9 million acres to 46.2 million. The yield went up from 45.9 to 46.2 bu per ac.
- Soybean yields were left unchanged while harvested acres jumped from 80.5 to above 84.0 million. This brought total soybean production higher by 165 million bushels.
- Overall Soybean demand remains solid with old crop exports raised higher by +20 million bushels to 1.620 billion.
- USDA raised the crush raised higher by +25 million to 1.725 billion. Also raised 14/15 exports raised by +50 million from 1.625 billion to 1.675 billion. Crush also raised higher by +40 million bushels from 1.715 billion to 1.755 billion.
- This was all offset by the higher acreage number from the end of June.
MY TAKEAWAYS
- I’m more bullish corn than most you will find, especially 2015 new crop corn. I did some acreage analysis. If we go back to when prices were this low in 2009 and apply that to planted acres for the next year, were looking at an 85-87 million acre number. Even with falling demand, we need to keep acres at these levels.
- Soybeans are still a sell in my opinion. Between the new acreage set up and the higher production both here and in SAM, I think the funds look to exit a lot of their bull bean spread positions over coming weeks. I expect to see beans below 10 dollars if corn stays below 4.
- The wheat report was horribly bearish, but I hesitate to sell much more here. I think the funds have added too many shorts at once and 5.00wheat is very competitive to other world markets.
- Stay long livestock if you have them on. I don’t see anything in these reports that should affect demand. Low grain prices support higher feeder prices as long as fat cattle stays supported.
THE CHARTS
DEC 14 CORN
NOV 14 BEANS
CONTINOUS WHEAT (WEEKLY CHART)
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Futures Traders’ Guide to the WASDE
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