The USDA cut U.S. corn exports by 75 million bu (mbu) in the December supply and demand report, which was in line with trade expectations. This put the U.S. carryout at 1.257 billion bu (bbu) as no other changes were made to either side of balance sheets. Global corn ending stocks were cut 2.3 million metric tons (mmt) to total 298.4 mmt. This was mainly from losses in the Black Sea and European Union crops. No changes were made to South American corn production this month. The average cash price per bushel on corn was reduced 10 cents per bushel to $6.70.

Soybean balance sheets were left unchanged this month. This kept U.S. ending stocks at 220 mbu, which was at the low end of trade expectations. The global soybean carryout increased 600,000 metric tons to total 102.7 mmt. South American soybean production was left unchanged this month, but lower trade is expected to give us the higher carryout. Trade is already questioning the Argentine production number of 49.5 mmt as this is above nearly all other forecasts. Chinese soybean imports were also left unchanged at 98 mmt, even though their appetite for imports remains depressed. The USDA kept their average cash price forecast on soybeans at $14 per bushel.

No changes were made to domestic wheat balance sheets this month either. This kept U.S. ending stocks at 571 mbu. On the global side we had a decrease in ending stocks of 500,000 metric tons to a total of 267.3 mmt. This was a result of drought losses in both Canada and Argentine. The Russian wheat crop was left unchanged at 91 mmt, which is well below that country’s forecast. The average cash value on wheat was lowered 10 cents to $9.10 per bushel.

U.S. beef production for 2023 was left unchanged at 26.28 billion pounds. This will be a decline of 2.14 billion pounds from 2022. Beef exports for 2023 are projected at 3.09 billion pounds, a decline of 472 million pounds. The average steer value for 2023 is projected at $155.55 per hundredweight.

Pork production for 2023 is now estimated at 27.35 billion pounds which is steady from 2022. Pork exports for 2023 are estimated at 6.28 billion pounds, a year-to-year decline of 54 million pounds. The average hog value in the U.S. is projected at $66.75 per hundredweight.

A source of pressure on the market is the difference between the domestic balance sheets and those of the global market. This is especially the case on soybeans, where the U.S. stocks to use is just 5 percent but global production is rising. This is most evident in Brazil where the crop could be over 30 percent larger than last year. As a result, Brazilian exports could be up 16 million metric tons. Canada is also projecting a larger canola crop and exports, and Indonesia is projecting the same on their oilseed crop. As trade becomes more comfortable with this outlook it is showing less worry over domestic balance sheets.

NOAA has released its revised La Nina outlook. NOAA now believes that the current La Nina pattern will start to weaken and be gone by spring. They also believe there is a 70 percent chance of neutral indicators at that time, meaning neither a La Nina nor an El Nino will be in place by that time. This is good news for grain production in both North and South America. Other regions of the world will likely see decline in grain production, mainly Australia, which tends to see record wheat crops in La Nina years.

It was interesting to see China was listed as a buyer of U.S. sorghum in recent sales data. This has given trade the indication that China may be getting ready to increase its feed grain purchases, as China has favored sorghum over corn at times as that grain does not have the same import regulations that corn does. The question is if this will open the door for U.S. corn sales to China, which seems unlikely given the price spread between the U.S. and other suppliers at this time.

The Consumer Price Index, the gauge to measure inflation, showed November prices were up 0.1 percent from the previous report, putting inflation at 7.1 percent over last year. Core inflation was reported at 6.1 percent. While up on the year, these were smaller increases than trade was expecting. Energy costs in November declined 1.6 percent while food costs were up 0.5 percent. This slowing rate of inflation makes it more likely the Fed will only increase interest rates by 50 basis points in future adjustments compared to recent increases of 75 points.

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