Typically, the December World Ag Supply and Demand Estimates report is a yawner with little movement expected. But that was not the case on Tuesday. Mike Zuzolo is president and founder of Global Commodity Analytics and Consulting in Atchison, Kansas, and he explains observers this time were watching for reaction to the tariff talk by President-elect Trump.
“Fortunately for the corn, the exports went up and took our carryover levels down in the domestic market to about 1.7 4 billion bushels. That is just under about 22 million bushels less than where we were last year. So it’s nice to see a tightening up of corn ending stocks as a result of improved demand.”
Zuzolo says the ending corn ratio shows improvement, but that was not the case across the board.
“I think the corn report was supportive enough on the export increase and the world numbers tightening up. Interesting to note that we went below 24% stocks-to-use ratios globally in corn with the December WASDE numbers that takes you down to the lowest since 2013 when it was about 22.5%. So we’ve got world corn and world wheat stocks down at 1011, year lows when you look at it from the demand perspective and the leftover supply. Beans, however, still sitting with a record high ending stocks number globally.”
The December WASDE does have livestock ratios following corn.
“Kind of like the corn we fed the supply bowl in the corn. It made sense. We were at a six-month high in corn when everything was said and done in the corn trade on Tuesday. Similarly, in the fat cattle, the USDA jumped the 2025 steer price to $191, and that was about a $3 increase from their prior month. And I believe that was the second month in a row they’ve increased the steer price for 2025 and so that, I think, opened up the door to longs feeling comfortable in their positions right now.”
Zuzolo says the WASDE is just the first of three potential price mover reports this week.
“The WASDE report, the Federal Reserve on Wednesday, and their update on their policy. And then probably the most important, believe it or not of all is whether China comes in and improves their economic outlook by stimulating their economy more, and that’s especially important in the copper market, in the crude oil market, and I would say the wheat market. Those three, in my opinion, have been hung down and been trapped by fears that China’s economy is only getting worse, and unfortunately, their inflation data suggests that with their PPI numbers that came out earlier this week, at either a 26th or 28th straight month of negative reading.”
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