Initial Reaction to the May WASDE Report

The May WASDE report is always one of the most anticipated reports of the year as it provides the first official projections for the current crop year.

Up until this point, analysts have been working from assumptions and penciled-in revisions to the USDA’s Ag Outlook forum estimates. Generally speaking, it is our expectation that, excluding a weather-related rally and typical seasonal opportunities, grain prices will likely remain under pressure.

We are in Stage #1 of what we refer to as the Golden Grain Cycle (learn about the Golden Grain Cycle). Our general expectation is for prices to continue to chop sideways around cost-of-production levels. This type of market provides ample opportunity for traders looking to trade within a sideways range. Stage #1 also presents an opportunity for allocators looking to build price exposure when prices are trading near production cost levels. The idea, of course, is to buy low and sell high.

While nothing in today’s report suggests to us that prices are likely to run away to the upside anytime soon, it is very early in the growing season, and the list of “uncertainties” includes weather forecasts, trade deals, and war/peace negotiations. Be certain to follow along with us as we do our best to keep you informed. If you haven’t already, be sure to subscribe HERE.

Corn

2025-2026 ending stocks are projected at 1.8 billion bushels. That’s some 242 million bushels lower than analysts were expecting. Coming in below expectations appears bullish on the surface, however, a 1.8 billion bushel carryout equates to a 27% year-over-year increase.

Yet, the USDA is projecting reasonably robust demand with feed and exports both expected to increase by some 3% year over year.

Strong demand is projected to take the sting out of potential record production, and while the expectation is for domestic supplies to increase year-over-year, the stocks/use ratio of 11.6% suggests a balance sheet that is neither burdensome nor worrisome, but adequate.

That said, the global supply picture could lend some support for prices. The USDA is projecting a tightening corn balance sheet, which, if realized, will be the third consecutive year in which global usage has surpassed global production.

SOYBEANS

The USDA projects a tightening domestic soybean balance sheet due in large part to a significant expected reduction in planted acres. Additionally, like corn, soybean demand is expected to remain robust, driven by an increase in crushing. Ending stocks are projected at 295 million bushels, which would represent a year-over-year decrease of 16%. The projected stocks/use figure is also seen dipping below the five-year moving average to a fundamentally bullish level of 6.7%.

Still, the global balance sheet is expected to remain fairly flush. The USDA is expecting record global production, which should keep pace with usage. The global stocks/use chart below shows a drop from 30 to 29%, however this drop is due to rounding, and for all intents and purposes global production is projected to meet usage.

We’d expect a flush global balance sheet to help keep a lid on soybean prices. Still U.S. soybean futures are trading above $10 per bushel and as of this writing are trading at their highest levels since February.

WHEAT

The U.S. wheat balance sheet is projected to expand rather significantly this year. Beginning stocks (the prior year’s ending stock figure is carried over as the current year’s beginning stock level) are projected to jump 21% to 841 million bushels. Add 1.921 billion bushels in production, and the 2025-2026 U.S. wheat supply is projected to come in at a healthy 2.882 billion bushels.

Total projected usage of 1.959 billion bushels points to a stocks/use ratio of 47.1%. That is a fundamentally bearish number that is likely to continue to weigh heavily on Chicago wheat futures prices.

Globally, the USDA is not projecting much in the way of changes year-over-year. Ending stocks are expected to be flat with usage ticking up ever so slightly. The chart below shows the global stocks use ratio improving on point to 33% compared to last year’s 32%. However, these numbers are rounded, and we are looking at the global projected stocks/use ratio as unchanged year over year.