Grain markets this morning are mostly lower ahead of tomorrow’s December WASDE report, with wheat prices the most notable, pulling back from its significant gains on Friday.
“The people themselves, and not their servants, can safely reverse their own deliberate decisions.”
– Abraham Lincoln (Former President of the United States)
Grain Markets Reverse Ahead of WASDE
Grain markets this morning are mostly lower ahead of tomorrow’s December WASDE report, with wheat prices the most notable, pulling back from its significant gains on Friday. Double digit gains were seen by the wheat complex, helping pull most of the market higher as, except for oats, all commodities in the grain markets closed higher for the first week of December.
Soybean prices continue to watch headlines for any updates to U.S. and Chinese relations, especially after last week’s arrest of Huawei’s CFO (who also happens to be the daughter of the founder of the company!). Considering the values that we’re at today, it’s pretty hard to ignore the opportunity to begin and/or extend your 2019/20 grain marketing plan. 
As we mentioned on Friday last week, canola prices have been gathering strength on slightly bearish numbers in the production reports from StatsCan and ABARES last week. However, Friday saw the Canadian gain a bit, which reduced some of canola’s gains for the week. However, the January 2019 contract did close more than $6 CAD / MT for the week. Also putting some pressure on canola prices last week was stronger farmer deliveries but less-than-ideal export volumes. Through Week 18 of the 2018/19 crop year, total Canadian canola exports are sitting at 3.46 MMT, down nearly 4% year-over-year.
Canadian durum exports saw a decent week with their second-highest total for the 2018/19 crop year as nearly 112,000 MT were shipped out last week. Total Canadian durum exports this crop year though are still tracking nearly 15% lower year-over-year though, with 1.12 MMT shipped out.
What to Expect in Tomorrow’s
Given all the geopolitical risk impacting grain markets, it’s almost like tomorrow’s December WASDE report is a mute event.
That in mind, here’s what grain markets are expecting in tomorrow’s WASDE report for ending stocks, and as compared to the November WASDE and final 2017/18 numbers.
- 945 million bushels (MBU) of U.S. soybeans; 955 MBU in November WASDE; 438 million in 2017/18;
- 112.8 million metric (MMT) of global soybeans; 112.08 MMT in Nov WASDE, 99.7 MMT in 2017/18;
- 956 MBU of U.S. wheat; 949 MBU in November, 1.09 billion bushels (BBU) in 2017/18;
- 266.8 MMT of total global wheat; 266.7 MMT in November; 279 MMT in 2017/18;
- 1.738 BBU of U.S. corn; 1.736 BBU in November WASDE; 2.14 BBU in 2017/18; and
- 307.6 MMT of global corn; 307.5 MMT in November WASDE; and 340.9 MMT in 2017/18.
Wheat prices will be mainly watching what production and export numbers the USDA updates for the Black Sea and Australia. Corn prices will be also be looking to the Black Sea, but also what things are looking like for the South American crop. Worth noting is that the Ukrainian corn production estimate from IAE suggests a 43% year-over-year increase in production to 35.2 MMT. Currently, the USDA’s estimate is 33.5 MMT.
Finally, other than the U.S. and Chinese watch, soybean prices will be watching what numbers come out of Brazil and Argentina. For the latter, the Rosario Grains Exchange suggested last week that soybean exports from Argentina to China could hit a new record of 14 MMT should the trade war between the U.S. and China continue. 
Wheat Prices Start December Strong
On Friday, wheat markets had a big day as market participants responded to a week of strong U.S. export sales. While total export activity is down year-over-year, it’s a positive sign for future sales. This is mainly because, usually around this time of year, you start to see Black Sea wheat exports slow down, and southern hemisphere supplies start entering the market. However, there is going to be less solid quality coming out of Argentina and certainly lower quantity out of Australia
This in mind, Chicago SRW wheat prices gained 3% on the March 2019 contract to close above $5.31 USD / bushel, up more than 15 cents on the week. Kansas City HRW wheat prices were up 2.3% for the week, or nearly 12 cents, to close at $5.12. Even new crop prices found some significant strength as buzz is starting that U.S. winter wheat plantings will hit another 100-year low. The September 2019 Chicago closed 4% higher at a couple cents under $5.50 while KC wheat was up 2% to close just under $5.45. Minneapolis, hard red spring wheat prices gained nearly 6 cents for the week, up 1%, to close at $5.815 USD/bushel.
As we’ve said a few times though, we’re expecting volatility for the next few months until some of this geopolitical risk subsidies. If it doesn’t, then we can likely expect more sporadic moves. Your grain marketing plan should account for some of this erratic behavior, but being cognitive of the reality that there’s both volatility to the upside, but also to the downside.