It’s hard to believe but we are already past the first week of December. But you cannot tell that by looking outside as unseasonal warm dry conditions continue to dominate the U.S. weather pattern.

At some point, if the dry conditions persist into 2021, it will start to become an issue. But at this point, a drought in the winter is not a bad thing. The weather has certainly allowed for producers to get caught up on a lot of tasks that have been getting put on the back burner. The weather has also allowed for producers to reclaim a lot of acreage that has been prevented from being planted over the past two to three years. This in itself will increase planted acreage in the Northern Plains next year.

The U.S. 2020 growing season is officially over and now the market’s focus will switch from the U.S. to South American growing conditions. The main influencer in the U.S. now will be demand. Demand has been lackluster at best, as wheat exports continue to be only routine sales. Corn exports remain strong with Mexico and China the main destinations. Soybean sales have remained strong but have slowed down significantly from their earlier record-breaking pace. The last reported daily soybean sale was back on Nov. 9 (only sales over 100,000 metric tons are reported daily).

For wheat, last week’s export shipments pace was estimated at 19.5 million bushels and sales were estimated 22.7 million bushels. After 27 weeks, wheat shipments were at 51% of USDA’s expectations versus 50% last year while sales were at 72% of expectations versus 65% last year. With 25 weeks left in wheat’s export marketing year, shipments need to average 19.2 million bushels and sales need to average 10.9 million bushels to make USDA’s projection of 975 million bushels.

Last week’s corn export shipments pace was estimated at 28.9 million bushels and sales were estimated at 53.6 million bushels. After 14 weeks, corn shipments were at 16% of USDA’s expectations versus 15% last year while sales were at 59% of expectations versus 34% last year. With 38 weeks left in corn’s export marketing year, shipments need to average 58.3 million bushels and sales need to average 28.7 million bushels to make USDA’s projection of 2.65 billion bushels.

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Last week’s soybean export shipments pace was estimated at 84.4 million bushels and sales were at 20.9 million bushels. After 14 weeks, soybean shipments were at 49% of USDA’s expectations versus 38% last year while sales were at 88% of expectation versus 59% last year. With 38 weeks left in soybean’s export marketing year, shipments need to average 29.4 million bushels and sales need to average 6.7 million bushels to make USDA’s projection of 2.2 billion bushels.

In other news, Organization of the Petroleum Exporting Countries plus, or OPEC+, has voted to increase oil production 500,000 barrels per day in January. This is friendly as the original production increase being considered was 1.9 million barrels per day.

In Washington, D.C., the can got kicked down the road, but this time only a short way. The House has passed a continuing resolution extending the deadline for the omnibus spending bill to Friday, Dec. 18. The Senate has yet to vote on the bill, but it is expected to pass and be signed by the president. The reason for the continuation is Congress is looking to combine a stimulus package with the spending bill. But late in the week there started to be push back on the stimulus package. It appears that a bipartition bill for $908 billion is being favored over the White House’s $918 billion package.

The grains appear to remain in retracement mode due to the lack of news as the holiday season approaches. The trade is reluctant to let the market fall out of bed, but with improving weather conditions in South America, it will be tough to push higher as well until China buying returns to the U.S. This is expected once China realizes South America will not have early soybeans available because of late planting.

In wheat news, French officials are estimating their wheat acreage at 11.7 million, sharply higher than last year’s 10.7 million but lower than the 12.6 million expected. Australian officials are estimating harvest progress over two-thirds complete. Japan bought 131,305 metric tons of wheat with 83,405 metric tons being U.S.

Corn has been the only market to see exports reported on the daily export report. During the week, Mexico bought 257,000 metric tons of U.S. corn and Taiwan was in and bought 65,000 metric tons of U.S corn.

Ethanol production continues to remain strong. Last week’s ethanol production estimate came in at 991,000 barrels per day, an increase of 17,000 barrels from the previous week. Stocks were estimated at 22.083 million barrels, up 843,000 barrels from the previous week.

Brazil is running out of soybeans, which was evident in their recent export sales report. Soybean exports for December look to be a measly 93,000 metric tons, the first month below 100,000 metric tons since January 2015. This will likely mean Brazil will have to import more soybeans from the U.S. to balance out their supply and demand needs.

On Thursday, Dec. 10, USDA released its December Crop Production report. For wheat, the report was friendly for both U.S. and world numbers. For 2020-21, USDA lowered wheat imports by 5 million bushels and increased exports by 10 million bushels. That lowered U.S. ending stocks by 15 million bushels to 862 million bushels, which was 15 million bushels lower than last month and 11 million bushels lower than the trade expected. The national average price was unchanged at $4.70.

For world wheat numbers, Argentina’s production was left unchanged at 18 million metric tons, Australia’s increased by 1.5 million metric tons to 30 million metric tons, and Canada’s increased by 200,000 metric tons to 35.2 million metric tons. EU’s production dropped by 800,000 metric tons to 135.8 million metric tons, Russia’s increased by 500,000 metric tons to 84 million metric tons and Ukraine’s was left unchanged at 25.5 million metric tons. All that lowered world ending stocks by 4 million metric tons to 316.5 million metric tons. That was friendly since the trade was expecting a small increase in world ending stocks.

The report was neutral to corn with no major changes. Imports to China were increased but Brazil's production was left unchanged. No changes were made to U.S. numbers. U.S. ending stocks for 2020-21 were left at 1.702 billion bushels, slightly lower than the trade expected. The national average price was left at $4.

For South America, Brazil’s corn production estimate was left unchanged at 110 million metric tons while the trade was expecting a cut of 1.2 million metric tons. Argentina’s production was cut 1 million metric tons to 49 million metric tons. That lowered world ending stocks by 2.4 million metric tons to 289 million metric tons, right in line with trade estimates. USDA did increase exports to China by 3.5 million metric tons to 16.5 million metric tons versus 7.6 million metric tons last year.

The report was neutral to negative soybeans. There was no increase to exports, a smaller than expected increase to crush, and no change in Brazil’s production. The only change in the 2020/21 US numbers was a 15 million bushel increase in crush to 2.195 billion bushels, a smaller increase than expected. Exports were left unchanged at 2.200 billion bushels. That led to a 15 million bushel decrease in U.S. ending stocks to 175 million bushels, which was 12 million bushels more than the trade expected. The national average price was increased by 15 cents to $10.55.

For South America, Brazil’s soybean production estimate was left unchanged at 133 million metric tons while the trade had expected a 1.1 million metric ton decrease. Argentina’s production was lowered 1 million metric tons to 50 million metric tons. That put world ending stocks at 85.6 million metric tons, which was 900,000 metric tons lower than last month, but 600,000 metric tons more than the trade expected. Imports to China were left unchanged at 100 million metric tons.

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