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Will WASDE break the grains selloff?

Shrinking global supplies could help curb bleeding futures prices in tomorrow’s monthly USDA reports

Jacqueline Holland

December 9, 2020

16 Min Read

USDA will release updated supply and demand targets tomorrow in the monthly World Agricultural Supply and Demand Estimates (WASDE) report. Trade estimates point to tightening corn and soybean supplies, while wheat supplies continue to notch historic highs on the global balance sheet. Here is a list of the top items that could shift markets in tomorrow’s reports.

Demand – driven adjustments

Surveying is currently underway for the National Agricultural Statistics Service’s (NASS) annual crop production report. Yield and acreage adjustments will likely not be made in tomorrow’s Crop Production report but will be included in the January 2021 WASDE report release. Thus, tomorrow’s WASDE will likely focus on demand adjustments.

U.S. 2020/21 Ending Stocks

million bushels

USDA December

Average Trade Guess

Range of Trade

USDA November




1,550 - 1,775





120 - 190





850 - 900


Source: USDA Office of the Chief Economist, Reuters


U.S. corn stocks will likely shrink in the December 2020 WASDE report. There are several opportunities for increased domestic usage rates, especially as processors see signs – even if fleeting – of a pandemic recovery.

  • Rapid COVID-19 vaccine development has given new hope to ethanol production prospects. October 2020 corn consumption for ethanol rose to 432.7 million bushels – the highest monthly usage rate since February 2020.

  • But the latest uncontrolled virus surge across the country could dampen USDA’s outlook on ethanol demand in the short run. Weekly fuel demand had dropped 9% between the beginning and end of November as lockdown restrictions were reenacted to combat the virus’ spread.

  • USDA added 325 million bushels to its 2020/21 corn export estimate in last month’s WASDE. Nearly 2.7 billion bushels of corn exports remains aggressive when weekly loading volumes are only 9% higher than the five-year average, especially as corn exports move to seasonably lower shipping rates by mid-December.

  • Demand from China could continue to support price levels at the current demand estimate. China has committed to purchasing 440.1 million bushels of U.S. corn in the 2020/21 marketing year. But 70% of those sales have yet to leave U.S. ports.

  • Chinese corn demand will be exceptionally critical to corn price support going forward. Marketing year to date U.S. corn exports to China are more than 56 times higher than the same period in 2019/20. But shipments to 2019/20’s top five U.S. corn buyers (Mexico, Japan, Columbia, Honduras, and Costa Rica) in the first 13 weeks of the new marketing year are 1.3% lower than the same period in the old crop year.

The most significant opportunity for price action following USDA’s release of tomorrow’s reports will invariably impact the soy complex. Strong domestic usage rates are competing with unrelenting demand from China. Domestic stocks could shrink to their tightest level since 2013 on the following factors.

  • Domestic soybean usage continues to soar to record levels. Crush rates recorded a new monthly record in October 2020 after USDA reported 196.5 million bushels had been processed for the month. The total eclipsed the previous high of 192.1 million bushels recorded in March 2020.

  • Soybean export loading paces and sales have been nothing short of extraordinary this year. International commitments of U.S. soy totaled 1.9 billion bushels as of November 26 – only 13 weeks into the current marketing year. So, it seems unavoidable that USDA will adjust 2020/21 soy exports higher than the current 2.2 billion bushel estimate in tomorrow’s WASDE reports.

  • Market chatter in recent weeks suggest smaller Chinese soy processors are more likely to cancel U.S. soy shipments at higher futures prices. But will it make a difference?

  • Nearly 73% of U.S. soybean cargoes shipped thus far in the 2020/21 marketing year were destined for China. Chinese and unknown buyers represent 689.4 million bushels of remaining exports – or 74% of total outstanding sales of U.S. soybeans. Export loading paces to China in the next couple months will be critical, before cheaper South American crops take over export channels.

Domestic wheat stocks are not expected to significantly change in tomorrow’s report. Rising corn prices could trigger an increase in feed demand for wheat, though it seems an unlikely adjustment.

  • Historical trends suggest that U.S. wheat exports record their lowest volumes of the marketing year during late October through late January. But so far during that period in 2020/21, U.S. wheat exports are nearly 9% higher than the five-year average.

  • USDA may readjust their 975-million-bushel 2020/21 U.S. wheat export target with this in mind, especially as lower global supplies and a dollar trading at nearly 20-month lows increase the attractiveness of U.S. wheat on the global stage.

Wheat supplies grow even larger

World 2020/21 Ending Stocks

million bushels

USDA December

Average Trade Guess

Range of Trade

USDA November




11,181.1 - 11,535.4





2,975.9 - 3,178.7





11,701.7 - 11,958.9


Source: USDA Office of the Chief Economist, Reuters

Corn and soybeans are the main story in the world grains markets for tomorrow’s WASDE updates, but a few quick words about wheat are warranted first.

  • Bumper crops in Canada and Australia, the world’s sixth and seventh largest wheat producers, will likely increase record-high ending wheat stocks in the 2020/21 marketing year. Canada and Australia are the world’s fourth and fifth largest global exporting bodies.

  • The Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES) places the 2020/21 Australian crop at 1.15 billion bushels as of last week. USDA’s current estimate is about 100 million bushels short of that forecast, so an adjustment may be warranted.

  • Results from a farmer survey conducted by Statistics Canada released last week suggest the Canadian wheat crop will rise 7.7% from a year ago to 1.293 billion bushels. USDA’s November forecast of 1.285 billion bushels is just slightly below that outlook. An 8-million-bushel adjustment is likely not enough to justify a USDA revision.

  • International wheat demand for livestock feed increased as global corn prices rose. A demand shift in favor of wheat usage could be in the cards if USDA expects corn prices to remain high.

  • Expect the global food hoarding to continue in the pandemic era. Global wheat imports are high in anticipation of global COVID-19 surges. Since we are in one currently, those domestic stockpiles are likely being put to use with nervous international governments likely looking – and eagerly – to buffer supplies to keep food prices stable.

South American crops take center stage

South American 2020/21 Corn and Soybean Production

million bushels

USDA December

Average Trade Guess

Range of Trade

USDA November









1,889.8 - 1,968.5





1,800.3 - 1,873.7










4,133.9 - 4,409.4





4,776.2 - 4,923.2


Source: USDA Office of the Chief Economist, Reuters

Trade estimates for corn and soybeans predict USDA will slash global ending stocks for the crops due in large part to drought damage and planting delays exacerbated by La Niña weather patterns in the Southern Hemisphere this fall.

USDA’s anticipated reductions of Brazilian and Argentine soybean production account for the lion’s share of lower world ending soybean stocks expected tomorrow. Increased Brazilian soy acreage will still result in the largest soybean crop produced by any country ever in the 2020/21 marketing year despite yield reductions.

Chinese corn import and usage rates will also be eagerly watched by the trade, as both are widely expected to contribute to shrinking global corn stocks. Declines to Brazilian and Argentine corn yields due to the aforementioned La Niña drought will likely tighten world corn supplies even further.

The reduced stocks will be necessary to curb the recent selloff in the corn and soybean futures markets. Bleeding markets will reign in losses depending on how far USDA decides to shrink South American production and how certain the department is about Chinese export demand.

USDA World Production

million bushels

USDA December 2019/20

USDA November 2019/20

USDA December 2020/21

USDA November 2020/21

Argentina wheat





Australia wheat





Brazil Wheat





Canada wheat





Russia wheat





Argentina corn





Brazil corn





South Africa corn





China corn





Ukraine corn





Argentina soy





Brazil soy





Source: USDA Office of the Chief Economist, Reuters


Follow us online at FarmFutures.com or on Twitter at @FarmFutures for live updates as the reports are released. USDA issues the reports, found here, at 11am CST.

About the Author(s)

Jacqueline Holland

Grain market analyst, Farm Futures

Holland grew up on a dairy farm in northern Illinois. She obtained a B.S. in Finance and Agribusiness from Illinois State University where she was the president of the ISU chapter of the National Agri-Marketing Association. Holland earned an M.S. in Agricultural Economics from Purdue University where her research focused on large farm decision-making and precision crop technology. Before joining Farm Progress, Holland worked in the food manufacturing industry as a financial and operational analyst at Pilgrim's and Leprino Foods. She brings strong knowledge of large agribusiness management to weekly, monthly and daily market reports. In her free time, Holland enjoys competing in triathlons as well as hiking and cooking with her husband, Chris. She resides in the Fort Collins, CO area.

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