This past week’s USDA reports delivered subtle but meaningful changes that are already shaping market sentiment. Both corn and soybean old crop stocks were lowered, tightening the balance sheets and helping justify some of the strength we’ve seen in recent weeks — especially in soybeans. While the market reaction wasn’t overwhelming, the report leaned constructive, particularly for old crop supplies.
For corn, the USDA lowered the old crop stocks-to-use ratio to 9.3%, the tightest it has been since 2021 and the second lowest in over a decade. This shift brings the 2024 figure in line with 2022’s 9.2% and well below last year’s 11.8%. Yet, despite the bullish tilt in fundamentals, corn futures have struggled as favorable planting weather continues to mute any upside momentum. The timing makes it difficult for the market to rally, especially with planting progressing ahead of schedule and little in the forecast to threaten production. On top of that, fund managers appear to have flipped to a net short position for the first time in six months — clear evidence that the trade isn’t fully buying into USDA’s outlook, especially when it comes to new crop.
USDA forecast the 2025 corn harvest at 15.82 billion bushels with an average national yield of 181 bushels per acre — both records. The crop would be up nearly 1 billion bushels, or 6.4%, from last year. While this sets the stage for a burdensome crop, USDA surprised the trade by estimating 2025-26 ending stocks at 1.8 billion bushels — well below analyst expectations of over 2 billion, thanks to the USDA’s corn export demand forecast, which would be the second highest on record. Unfortunately, many in the trade view it as overly optimistic given global competition, large South American supplies, and uncertainty around pending trade deals. So, until a clearer weather threat emerges or demand actually materializes, the corn market may remain under pressure.
Soybeans, meanwhile, are showing quiet strength. The USDA pegged the old crop soybean stocks-to-use ratio at 6.68% — the second lowest since 2012. That helps explain why the market has held key support despite economic and trade uncertainty. Since the report, old crop soybean futures have rallied to new highs for the move. From the tariff-induced low, the market has now gained over 90 cents (as of this writing). That’s a strong move and worth rewarding. For those holding old crop beans in the bin, this is an opportune moment to scale into sales.
Looking ahead, the soybean complex remains sensitive to China trade news, but tighter-than-expected 2025 soybean ending stocks offer support. USDA estimated the 2025 soybean crop at 4.34 billion bushels, down slightly from last year despite an improved yield forecast of 52.5 bushels per acre. As a result, ending stocks for 2025-26 are pegged at 295 million bushels — a 16% drop from this year and well below trade estimates. While crushing demand is expected to rise and exports fall, the key is supply. U.S. supplies are much tighter than expected — even with current trade tensions. With that, soybean futures may try to buy acres in the near term but time is running out with 48% of the crop planted. It could be a quick and dirty play but worth watching — especially in fringe acre areas.
Wheat continues to be the weakest link. The wheat market has struggled to stabilize amid persistent bearish pressure. Like corn, the fundamental outlook topped with favorable weather forecasts are making a rally difficult for this time of year. With that, the question many are asking is how much lower can wheat go? When comparing the May 2019 USDA report to this year’s, the similarities are striking. Both years saw production around 1.92 billion bushels, but the 2025 yield is one bushel higher. Ending stocks are lower now at 923 million bushels compared to 1.072 billion in 2019, and farm prices are projected at $5.30 versus $4.70 in 2019. With that in mind, the current setup feels eerily similar to 2019 — but bearish sentiment remains strong.
For wheat to turn the corner, the market needs a catalyst. A 2012-style weather scare could help, but so could a trade deal as China remains a potential wildcard. Though they haven’t historically bought U.S. wheat, they are actively sourcing from Australia. If the rumored “90-day deal” includes wheat, it could be just enough to shift the tone. Until then, the path of least resistance remains sideways to lower.
Going forward, demand will become the critical driver for all three major grains. While tighter old crop supplies for both corn and soybeans are offering near-term support, sustained demand will be essential. For corn, robust export interest, steady ethanol use, and growing feed demand must remain firm to absorb record projected production and keep stocks manageable. In soybeans, strong crush margins and renewable diesel demand are key to offsetting reduced export share amid Brazil’s dominance. Wheat, lacking the tighter fundamentals of corn and soybeans, is even more dependent on export demand and potential trade catalysts to break out of its bearish trend. Remember, China hasn’t historically bought large amounts of corn or wheat from the U.S. Could a trade agreement change that historical bias? Time will tell.
Finally, macroeconomic data added a supportive undertone this past week. The latest CPI report showed headline inflation easing to 2.3% — the lowest since February 2021 — while core inflation held steady at 2.8%. Although a rate cut isn’t imminent, softening inflation opens the door for potential easing later this year. For grain markets, the immediate impact was a weaker dollar — a positive for U.S. export competitiveness at a time when demand needs to do more heavy lifting.
With old crop supplies tightening and new crop risks lurking just under the surface, this is the time for producers to stay flexible. Consider scaling in final old crop sales as futures push toward resistance, and don’t be afraid to have target orders working for new crop. Wheat remains a tough sell, but keep an eye on trade updates or weather surprises for potential pricing windows. Think defensively but stay flexible — because in a market like this, the best strategy is having one before the window of opportunity slams shut.
Allison Thompson is a market analyst with The Money Farm in Ada, Minnesota. She previously has worked as a Farm Business Management instructor and is active on her family's Mahnomen, Minnesota, grain farm.