Corn and wheat continue higher post-WASDE.

This morning’s grain trade has corn pressing the October high this morning trading over 4.50 as they continue to respond to yesterday’s USDA report, which contained a bullish surprise for corn, with carryout coming in 200 million bushels lower than last month’s estimate and 168 million bushels below trader’s pre-report expectations. With the strong start to the corn export program, with sales running 330 million bushels ahead of last year, the USDA had no choice but to adjust higher, adding 150 million bushels to their yearly export expectations.

The strong start to ethanol production fueled by decent margins, good weather, and available corn pushed the USDA to increase the corn used for ethanol production, up 50 million bushels from last month. At 5.5 billion bushels, we are using one of the largest amounts of corn for ethanol in recent years. Both adjustments to demand dropped US corn carryout to 1.738 billion bushels, down 200 million bushels from last month and lower than last year.

World carryout was also reduced, with some minor adjustments made, though nothing significant was done to the South American outlook. At 296.44, global corn carryout was much lower than anticipated and at one of the lowest levels in recent years. The reported quality issues in both the EU and China are the most interesting when looking at the cash corn market and the overall global corn situation. This has not yet shown up in USDA figures as its consequences are difficult to quantify, but it will likely result in increased imports for the EU as they work to blend out bushels with a higher toxin level.

Soybean ending stocks were unchanged from last month, though many questions remain about the soybean oil balance sheet. The USDA did increase its expectations for soybean oil exports, generating the additional supply through increased production via a higher extraction rate and lower domestic usage.

Wheat ending stocks came in slightly lower than traders expected, with reductions in soft red and white wheat ending stocks. Global ending stocks came in as expected, though it was interesting to see the USDA remain hesitant in cutting Russian wheat exports, only taking their projection 1 mmt lower this month. At 47 mmt, the USDA has the highest projection of any group and is sitting around 5 mmt or 184 million bushels above what seems to be market consensus.

Reports came out overnight that China may look to weaken its currency in response to Trump’s tariffs, something that is weighing heavy on bean sentiment again this morning. It is interesting to note that after all the talk about Chinese soybean cancellations the other day out of the PNW, it was then reported that at least three cargoes were sold to China for March shipment out of the Gulf yesterday.

It’ll be interesting to see if farmer selling escalates today after yesterday’s report. If 452 ¼ gives way, the market will be targeting 459-465 in the short run, as index funds may build length and ownership in the market before the end of the year.

Live and feeder cattle futures closed sharply higher yesterday, and a firm start is anticipated this morning. December cattle put on $2.00 on Tuesday, trading over $190 and marking the best close since March. The rest of the cattle market followed, and spreads tightened as December prices were in a higher cash trade this week. The negotiated fed cattle trade did get underway on Tuesday with some light sales in Kansas, and Texas quoted $191, which was steady with last week for Kansas and $1 higher for Texas. The cash trade this week is anticipated to be no less than steady.

In yesterday’s December WASDE report, the USDA only made minor changes to the supply and use outlook for 2025. Price forecasts were raised for all quarters, with quarter one $1 higher at $188 and the second quarter increasing $3 at $189. In the last 20 years, the WASDE forecast has been too low 60% of the time by an average of $11.