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New USDA Reports Shift Trading Perspectives

Key Takeaways

  • Corn: Old crop stocks tighten to the lowest level since 2021, but futures struggle amid favorable planting weather and cautious fund managers. USDA forecasts record production but lower ending stocks due to strong export demand projections.
  • Soybeans: Old crop supplies are very tight, supporting prices despite trade uncertainties. New crop supplies are expected to tighten further, with potential for prices to encourage additional planting.
  • Wheat: Remains the weakest link with bearish sentiment dominating, despite lower ending stocks and slightly higher prices than in 2019. Market awaits a catalyst like weather scares or trade deals.
  • Market Outlook: Demand and trade developments, especially involving China, will be critical for price direction. Easing inflation and a weaker dollar provide supportive macroeconomic conditions.
  • Producers: Staying flexible with sales and monitoring trade and weather developments will be key to navigating this complex market.

Recent USDA reports have subtly but meaningfully shifted market views for corn, soybeans, and wheat, creating both challenges and opportunities for producers as planting progresses and new crop outlooks appear. While the overall market reaction has been measured, tightening old crop supplies for corn and soybeans and continued bearish pressures on wheat suggest a complex and evolving grain market landscape.

Corn Market Analysis: Tight Supplies Amid Favorable Planting Conditions

The USDA’s latest figures lowered the old crop corn stocks-to-use ratio to 9.3%, the tightest since 2021 and the second lowest in over a decade. This tightening of old crop supplies has helped support recent price strength, especially given solid export demand. However, corn futures have struggled to gain significant momentum because favorable planting weather has allowed farmers to plant earlier and reduce near-term production risks. This has muted speculative interest and price rallies.

Fund managers recently shifted to a net short position in corn for the first time in six months, signaling skepticism toward the USDA’s optimistic new crop outlook. The USDA forecasts a record 2025 corn harvest of 15.82 billion bushels, with an average yield of 181 bushels per acre, both all-time highs. This would represent a 6.4% increase over last year’s crop, potentially resulting in a burdensome supply.

Despite record production, USDA estimates 2025-26 ending stocks at 1.8 billion bushels, lower than analyst expectations of over 2 billion. This tighter stock projection is driven by USDA’s forecast for corn export demand to be the second highest on record. However, many traders view this as optimistic given strong global competition, large South American supplies, and uncertainties in trade negotiations.

What should producers watch?
Until weather or demand factors shift meaningfully, corn prices may remain under pressure. Producers might consider scaling old crop sales as prices approach resistance and keep target orders ready for new crop, balancing caution with opportunity.

Soybean Market Strength: Tight Old Crop Supplies and Future Outlook

Soybeans continue to demonstrate quiet but notable strength despite ongoing trade uncertainties and economic concerns. The USDA pegged the old crop soybean stocks-to-use ratio at 6.68%, the second lowest since 2012, reflecting very tight supplies. This helps explain why soybean prices have held key support levels, even amid broader market volatility.

Since the report’s release, old crop soybean futures have rallied more than 90 cents from tariff-induced lows, rewarding producers who held on to their bins.

Looking ahead, the USDA estimates the 2025 soybean crop at 4.34 billion bushels, slightly down from last year despite improved yield forecasts of 52.5 bushels per acre. Ending stocks for 2025-26 are forecast at 295 million bushels, a 16% drop from this year and well below trade expectations. This tighter supply outlook, combined with strong crushing demand and growing renewable diesel use, supports prices despite reduced export prospects amid trade tensions with China.

With about 48% of the soybean crop already planted, the window for significant acreage shifts is closing, but soybean futures could still encourage planting in fringe areas.

Advice for producers:
For those holding old crop beans, scaling into sales near current price highs could lock in gains. For new crop, monitoring market signals and trade developments will be critical as planting progresses.

Wheat Market Challenges: Bearish Sentiment and Awaited Catalysts

Wheat is currently the weakest of the major grains, facing persistent bearish sentiment and few positive fundamental catalysts. The USDA’s current report shows production estimates similar to 2019, around 1.92 billion bushels, with a yield slightly higher by one bushel. Ending stocks, however, are forecast lower at 923 million bushels compared to 1.072 billion in 2019, and farm prices are projected higher at $5.30 per bushel versus $4.70 in 2019.

Despite these seemingly improved fundamentals, wheat prices continue to struggle due to a lack of clear demand drivers and bearish investor sentiment.

What could change the wheat outlook?
The market is waiting for a catalyst, such as a weather scare reminiscent of 2012 or a trade deal with China, which currently sources wheat largely from Australia. If a rumored “90-day deal” includes wheat, this could shift sentiment and prices. Until then, wheat prices are likely to trade sideways or trend lower.

Demand as the Critical Driver for Grain Prices in 2025

Demand will be the critical factor shaping prices for all three major grains in the months ahead. Near-term tightening of old crop corn and soybean supplies offers some support, but large new crop supplies mean sustained demand is essential to avoid price declines.

  • Corn: Requires strong export sales, steady ethanol production, and growing feed demand to absorb record supplies.
  • Soybeans: Need robust crush margins and renewable diesel demand to offset export challenges amid Brazil’s competitive position.
  • Wheat: Depends heavily on export demand and trade developments to reverse its bearish trend.

Trade developments, especially involving China, remain a wild card. Historically, China has imported limited amounts of U.S. corn and wheat, but any shift in trade policy could open new markets and boost prices.

Macroeconomic Factors Supporting U.S. Grain Export Competitiveness

Recent U.S. economic data adds a supportive backdrop. The Consumer Price Index (CPI) showed headline inflation easing to 2.3%, the lowest since February 2021, with core inflation steady at 2.8%. Although no Federal Reserve rate cuts are imminent, easing inflation opens the door for monetary easing later this year.

For grain markets, this translated into a weaker U.S. dollar, improving U.S. export competitiveness at a time when strong demand is vital to absorb large crops.

What Should Producers Do Now?

Given tightening old crop supplies and looming new crop risks, producers face a delicate balancing act. Here are some practical tips:

  • Be Flexible: The market is likely to move quickly when opportunities arise. Being prepared to act decisively can help maximize returns or minimize losses.
  • Scale Old Crop Sales: As futures approach resistance levels, consider locking in gains incrementally rather than waiting for large rallies.
  • Set Target Orders for New Crop: With records set for production but risks lingering, having price targets in place lets you capture favorable levels without chasing the market.
  • Monitor Trade and Weather: Stay informed on developments, especially on China trade negotiations and weather events that could create sudden market shifts.

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Tasbia Tahir Ali