November 15, 2022
Joe Lardy, market intelligence and insights analyst at CHS breaks down the USDA’s November WASDE report and explains what it could mean for end-of-year markets.
The USDA’s November World Agricultural Supply and Demand Estimates (WASDE) report offered few surprises, says Joe Lardy, market intelligence and insights analyst at CHS. Although no news might be good news for growers right now, Lardy encourages them to monitor domestic and global markets to capitalize on price volatility opportunities.
No market movers
The November report came relatively close to expectations, says Lardy. While some analysts may have been hoping for news that would support price increases, he says this report may bring temporary market stability. “I don’t think the market needs any significant movement right now. Many people were hoping we would get a big surprise that would increase prices. On the other hand, we could also get news that sends prices lower.”
Although there weren’t any major market movers, the report did include a slight yield bump for corn and soybean production. Lardy says that’s likely due to harvest data from the eastern Corn Belt, which has shown stronger yields than other regions this season.
Global estimates see minor changes
While many analysts predicted insignificant changes on the domestic front, they did expect to see more movement on a global level.
“Analysts expected to see significant global revisions from the USDA, changing the world balance sheet,” says Lardy. “For example, almost everybody believes the Russian wheat crop was well over 100 million tons, but the USDA reported only 91 million tons. And we know there were frost issues in South America, but those production estimates were also largely unchanged.”
There were minor changes in some global estimates, most notably Australia’s production, but nothing in the report had market-moving momentum. Lardy says whether the USDA will recognize these changes in upcoming reports remains to be seen.
What this means for farmers
While the November WASDE didn’t rouse markets as many had expected, Lardy says recent market volatility means growers should continue to pay attention to domestic and global conditions. “Generally, we see thinner liquidity toward the latter part of the year. When that happens, markets tend to bounce around. We’ve also seen these markets react strongly to what outside markets are doing,” says Lardy. “These situations pose an opportunity for farmers to capitalize on higher basis levels, but they must be prepared to execute.”