USDA’s August corn yield estimates are bearish

The U.S. Department of Agriculture released its first surveyed estimates of U.S. corn yields, and the numbers exceeded expectations.

These estimates will cast a bearish tone on the global grain markets during the coming months. The numbers for wheat and soybeans were neutral to bullish, but these were largely a sideshow when compared with corn.

Corn yields were estimated at 188.8 bushels per acre, which was 4.4 bu. per acre larger than the average trade estimate and 9.5 bu. per acre higher than last year.

Not only were the yields increased for corn, but the harvested area increased by 1.9 million acres from the June acreage report. The area planted to corn increased by 2.05 million acres from the June survey.

The increased area and yields resulted in a jump in corn production to a record 16.74 billion bu.

The increased corn production pushed the forecast of corn ending stocks to a record 2.12 billion bu. The total domestic use was increased by 345 million bu., and the export forecast jumped by 200 million bu.

The USDA estimate for average U.S. cash corn prices dropped by 30 cents per bu. to US$3.90 per bu. This would be the lowest cash price for corn since the 2019-20 crop year.

The increase in U.S. corn production also boosted global supplies and ending stocks.

Production is expected to reach a record 1.289 billion tonnes, while ending stocks are forecast to hit 282.5 million tonnes.

Only minor adjustments were made for the major corn exporter’s production, which increased by 1.65 million tonnes from last month. There will be plenty of corn to meet demand in the 2025-26 crop year.

This large supply will affect not only corn and feedgrain prices but also wheat and other grain prices.

The irony is that the wheat estimates from the USDA were mostly neutral to positive. Global wheat production was reduced by 1.65 million tonnes to 806.9 million tonnes. The estimate of wheat ending stocks dropped to 260 million tonnes, which is down by 1.48 million tonnes from July.

The U.S. wheat estimate was lowered by only two million bu. to 1.927 billion bu. The department dropped the HRS estimate by 20 million bu., but increased HRW output by 14 million bu. HRS production is now expected to reach 449 million bu.

The main losses in the northern Plains were in Montana with yields dropping by two bu. per acre. North Dakota wheat yields remained unchanged from the July estimate. The USDA did hike durum production by seven million bu. to 87 million bu.

Although the wheat numbers were neutral, there will be no escaping the downward pressure from the corn market.

Corn futures have lost close to $1 per bu. since mid-April, and the USDA report will push prices even lower. This is not good news for wheat markets, which will struggle to break free from low corn prices this marketing year.

Tags: prices, ending stocks, Production, wheat, yields, U.S., futures, estimates, markets, harvested area, corn