Today's big story was on wheat! A commodity that as of late, has been on the backburner. Russia’s Deputy Prime Minister today said that a large portion of the country’s winter crop was in poor condition and will need to be replanted by spring crops; data from the state weather forecaster earlier this week over 37% of winter crops either have not sprouted or are in “poor” condition, compared to just 4% on the same date last season and the worst number on record. This includes a significant amount of winter wheat acres!
Statistics Canada pegged 2024/25 all-wheat production at 34.958 million tonnes, slightly below the average 35.04 MMT estimate but up from 32.95 MMT last season. Corn production of 15.345 MMT was below the 15.37 MMT expectation and 15.42 MMT in 2023, while soybean output of 7.568 MMT beat out the 7.27 MMT guess and 6.98 MMT in the previous crop cycle. U.S. 2024/25 soybean and wheat carryouts are seen basically steady in Tuesday's December S&D Report (WASDE), with corn ending stocks seen down 20-25 million bushels. South American production figures are expected to remain steady with last month's estimates.
Export sales were good today, with a flash sale of soybeans to China to boot. Marketing year to date corn export sales exceed the seasonal pace needed to hit USDA's target by 284 million bushels, led by "unknown destinations" committing to 297 million bushels, up from 107 million a year ago. Marketing year to date soybean export sales exceed the seasonal pace needed to hit USDA's target by 88 million bushels. China is the big buyer, but it continues to lag the pace of recent years. A plethora of other countries are buying after China emptied Brazil's shelves. Marketing year to date wheat export sales exceed the seasonal pace needed to hit USDA's target by 22 million bushels. Cheap prices raise the risk of a black swan event creating price strength more than additional weakness. They can go down from here, but end users start worrying more about upside risks when prices get this cheap. Cheap prices create demand, but the question remains, "How much of this demand is front-loaded from average"?
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