The May WASDE report had some surprises that many analysts and traders did not expect, according to North Dakota State University Extension crops economist, Frayne Olson. Among those surprises was a lack of downgrade or some reduction in the forecast for exports levels, as May is the first month of the year where the USDA releases forecasts for the new crop year.
For old corn crop, USDA increased the amount of export sales on corn. Another surprise to some is that the pace for U.S. exports this year is ahead of what had been seen before.
“The fact that we didn't get major reductions for the new crop — USDA’s forecast right now is pretty much a hold-even with the kind of export pace that we saw in 2024. So that's a good thing, but again, life changes very quickly. We'll have to watch that very closely,” Olson said.
While tariffs have put another layer of uncertainty when it comes to the grain markets, Olson said he’s been observing more of a "wait and see" attitude.
“From my perspective, I don't think we've seen the volatility that I was expecting. I truly was expecting a lot worse. So even though they're paying attention, it's not something that is causing a lot of disruptions yet,” he said.
Olson believes a part of the smooth waters the markets are experiencing is due to other countries coming to the U.S. and having discussions about the markets and tariffs. He said it seems like progress is being made toward getting some formalized trade agreements in place.
The summer months are also slower times when it comes to export sales, Olson said, especially in soybeans, but for corn and wheat as well. But the export sales become more aggressive as harvest season approaches.
“There's a window here where we have some time. But as we get closer and closer to harvest, I think the market is going to be more and more sensitive to any kind of new news, and the trade disputes are something to definitely pay attention to,” Olson said.
After the Wheat Quality Council hard red winter wheat tour in Kansas, it appears wheat yields will be higher than has been seen in the past couple of years. But now, some disease pressure is starting to show.
“We still have a little bit to go, and there are some people concerned about maybe some light test weight or some lower yields because of that. But right now, indications are that in the United States, we're going to have a pretty good winter wheat crop,” Olson said.
According to Olson, China is the largest wheat producer in the world. Currently, northern China is getting very hot and dry, which is where the country produces their massive amounts of wheat. If the heat continues in their wheat growing region, Olson thinks it could be an opportunity for U.S. wheat producers.
"If we have a big U.S. crop, is there the potential to try and sell some wheat into the Chinese market or not? We will have to wait to see if China does come in and buy if they need to, but only as a last resort,” Olson said. “So it's not something that we're expecting to happen … but we’re watching it pretty closely.”