USDA cut its corn yield estimate in its latest report, but the trade saw it coming. The bigger story hiding in the September Crop Production and World Agricultural Supply and Demand Estimates (WASDE) report may be stocks, and the fact corn stocks-to-use just dropped below 10%.
In its latest yield and production estimates report, USDA did confirm lower corn yields, but there were no major surprises. That’s because USDA’s latest yield estimates were line with what the market was expecting. According to AgMarket.net’s Jim McCormick, that has analysts calling this a bullish report dressed up as a boring one.
Key changes in USDA’s September WASDE report include:
- Corn yield: 178.5 bu. per acre, down 2.2 bu from August
- Corn production: 15.8 billion bushels, down 213 million bushels from August
- Soybean yield: 52.8 bu/acre, up 0.1 bu from August
- Soybean production: 4.5 billion bushels, up 16 million bu from August
- Cotton yield: 776 lbs/acre, down 3% from August
- Cotton production: 13.2 million bales (down 3% from August)
- Wheat yield/production: unchanged from August, with no revisions to the U.S. balance sheet this month
Corn initially rallied on the news, but ended the day lower. Soybeans also sunk on the report. Jim McCormick of AgMarket.net joined Michelle Rook on Markets Now to break down the report and how traders reacted.
Corn: Yield Down, But It Was No Surprise
USDA pegged the 2026/27 corn yield at 178.5 bushels per acre, down 2.2 bushels from August. The reduction was widely anticipated, as the trade guess leading up to the report was only one-tenth of a bushel off USDA’s actual number.
“The trade did a pretty good job estimating,” McCormick told Rook. “So if you look at what the market did, it rallied dramatically from the August report. So we are not getting a massively bullish movement on that number, simply because it looks like it was pretty much priced in by the trade.”
McCormick says the cut reflects the toll adverse August weather took on the crop, but he was quick to add perspective.
“Our clients we’ve talked to, the early yields [are] coming in 10, 15% below a year-ago levels. I’m going to stress, it is not a disaster. Even with this revision down, you’re still looking at the second-largest corn crop ever, by almost 500 million bushels. So there is no shortage of corn.”
He describes the crop as one that simply “had its nicks this summer,” from too much rain in some regions, too much heat in others.
With a minor reduction in harvested acreage layered on top of the lower yield, USDA now projects corn production at 15.8 billion bushels for the year.
State-by-State Moves
The state-level detail told a regional story, according to McCormick:
- Iowa: up 3 bu. per acre from last month
- Illinois: down 3 bu. per acre
- Nebraska: down 6 bu. per acre
Stocks-to-Use Slips Below 10%
Corn ending stocks came in at 1.567 billion bushels, down 86 million bushels from last month, a figure McCormick called bullish.
“When you look at the stocks used, you’re now below that magical kind of line of 10%,” he adds.
USDA also came in above the average trade guess after cutting new-crop feed and residual use by 150 million bushels, offsetting some of the lost production. He noted the old-crop feed and residual figure was left unchanged for now but will likely be revisited once the quarterly grain stocks report comes out later this month.
When asked by Rook whether smaller crops tend to get smaller as harvest progresses, McCormick said that’s the traditional pattern.
“It seems like when the market starts to see a shrink in September, follow up in August, the bias would be for this crop to get a little bit smaller, but maybe not quite as big a cuts. Maybe you’ll be looking for a half bushel or a bushel cut from here on out,” says McCormick.
He added that the domestic stocks-to-use ratio isn’t the only number to watch, as the world balance sheet matters too, with global corn ending stocks now at the tightest level in 12 years. A production shortfall in South America, where an El Niño pattern raises the risk of a wet north and dry south in Brazil, could tighten that picture further and push the market “into somewhat of a rationing mode.”
Soybeans: Yield Ticks Higher, Stocks Stay Historically Tight
USDA raised the soybean yield estimate 0.1 bushel per acre to 52.8 bu. per acre, a modest move up after the trade had actually expected a slight decline. McCormick said the number didn’t shock the market.
“The bias for most of the month of August in general was, we had a very wet August... the thought process was that would help fill out the beans and maybe have less pods, but bigger beans in the pods, and that might have been accounted for,” says McCormick.
Combined with higher harvested area, the yield bump pushed production up to 4.5 billion bushels.
State-by-State Moves
- Illinois: down 1 bu. per acre
- Iowa: up 2 bu. per acre
- Nebraska: up 3 bu. per acre
- North Dakota: down 4 bu. per acre
McCormick said the state breakdown lined up with what the market was already hearing from farmers and wasn’t “earth-shattering.”
Ending Stocks and the China Wildcard
Soybean ending stocks were pegged at 310 million bushels, down 10 million bushels from last month — still historically tight. USDA also raised the export forecast, which McCormick says is justifiable given aggressive Chinese buying ahead of the Trump-Xi meeting.
“The accounting does look like they don’t have all the demand accounted for,” he told Rook, noting that if China fulfills what the White House has characterized as a commitment to buy 25 million metric tons, the export number could climb further and draw stocks down even more.
McCormick also pointed to a factor beyond the traditional supply-demand balance: energy markets.
“The bean market right now, I tell my clients, you don’t really produce a food product anymore. You’re producing an energy product,” he says, citing record-high diesel prices — around $6 a gallon — as a source of fund buying interest in soybeans, driven in part by supply disruptions tied to the wars in Ukraine and the Middle East.
He cautions that any production disappointment, whether in the U.S. or South America, could force the market into a sharper rally to ration demand.
“We are going to get into a very interesting situation where the market may have to surge even higher to ration out demand,” he says.
On the softer trading Friday, McCormick attributed it partly to profit-taking after a big run higher and partly to farmer selling.
“Statistically speaking, Michelle, our best estimate is about 80% of this corn crop is unpriced that’s in the field, and roughly 80% [of] the beans are unpriced,” he says adding that on-farm storage limits will force some grain to market regardless of fund positioning.
Wheat: Domestic “Nothing Burger,” But Logistics Remain the Real Story
The U.S. wheat balance sheet was largely unchanged this month — what McCormick called “a nothing burger” — while global ending stocks were actually raised 3 million metric tons. McCormick says that’s not as bearish as it might look, since the real constraint on the wheat market isn’t supply.
“The real problem to the market is the logistics issue,” he said. “If you cannot get that product out of Russia, and you cannot [get that product out of] the Ukraine, this is going to become a situation of where do you find that product.”
He noted that while U.S. export sales haven’t been especially strong, prices have still rallied as buyers reshuffle who they source wheat from.
Market Reaction
Corn turned green following the report’s release, before turning red again, while soybeans stayed sharply lower on the session after hitting new contract highs in the run-up to the report, a move McCormick chalked up to profit-taking and farmer selling rather than a bearish read on the numbers themselves. Cotton also traded down on the day.
How the Numbers Compared to Pre-Report Estimates
Going into the report, analysts surveyed by Reuters were close to the mark on corn, but not exact.
The average trade guess called for:
- Corn production: 15.785 billion bushels
- Corn yield: 178.2 bushels per acre
Had those estimates been realized, corn production would have declined 228 million bushels from August, with yield down 2.5 bushels per acre. USDA’s actual print showed a smaller yield cut (2.2 bushels, versus the 2.5-bushel decline analysts expected) and, at 15.8 billion bushels, came in slightly above the average pre-report production estimate.
On the stocks side, analysts were looking for:
- 2025/26 (old-crop) ending stocks: 1.944 billion bushels
- 2026/27 (new-crop) ending stocks: 1.528 billion bushels
USDA’s new-crop corn ending stocks figure of 1.567 billion bushels came in above the average trade guess of 1.528 billion, one reason McCormick pointed to the stocks-to-use ratio, now under 10%, as the more bullish takeaway from the report than the yield number itself.
