WASDE projects record corn crop, tighter soybeans, wheat under pressure – Saxo Bank - Middle East Business News and Information
The latest USDA World Agricultural Supply and Demand Estimates (WASDE) report delivered a jolt to U.S. grain markets on Tuesday, triggering sharp price moves across corn, soybeans and wheat. The report's most significant surprise came in corn, where updated forecasts pointed to an even larger harvest than traders had anticipated, while soybeans moved in the opposite direction on a smaller crop and tighter supplies. Wheat, meanwhile, tracked corn lower as global abundance kept pressure on the market.
In corn, USDA raised its production estimate to a record 16.742 billion bushels, nearly 5% above the average trade forecast, on a yield of 188.8 bushels per acre and increased acreage. The result was a steep jump in projected ending stocks by this time next year to 2.117 billion bushels, up from both expectations and last month's forecast. The market reaction was swift: December corn futures fell 3.3% to $3.92 per bushel, marking a fresh contract low.
The sheer size of the crop has deepened the market's contango structure, where deferred futures trade above spot prices to reflect storage and financing costs. In an oversupplied market, this carry can widen further and for speculators holding short positions, this environment offers an added advantage. As contracts roll forward, higher-priced deferred months tend to converge toward the lower spot price, creating a positive roll yield that can supplement outright price declines. As an example the December 2026 future currently trades 49 cents above the December 2025 contract, reflecting an annualised roll yield for holding a short position of around 12%.
Overall, months of price weakness has driven the sector to a multi-year low in the process supporting the mentioned short selling trade by speculators, not only in corn but also at times in soybeans, and not least wheat where hedge funds have maintained a net short position for a record period of 37 months.
Soybeans told a different story. Production estimates were cut to 4.292 billion bushels, nearly 2% below expectations, as reduced acreage more than offset a modest yield increase to 53.6 bushels per acre. Ending stocks were lowered to 290 million bushels, almost 15% below the market's forecast. The tighter balance sheet lifted November soybeans by 2.1% on the day, reversing earlier losses.
Wheat offered few surprises in the U.S. balance sheet, with production little changed at 1.927 billion bushels and ending stocks only slightly below expectations. However, global supply remains abundant, with world ending stocks in line with forecasts at 261.6 million tons. December Chicago wheat futures fell 1.8% to $5.2375 per bushel, also touching a contract low, underlining the heavy influence of international supply flows from the Black Sea, Europe and Australia.
Looking ahead, several factors could still shift the post-WASDE picture. South American planting and early-season weather will be closely monitored, particularly in Brazil and Argentina, where adverse conditions could tighten global soybean supply and indirectly lend support to corn. In the U.S., harvest results could challenge or confirm USDA's lofty yield projections, especially for corn, while developments in Chinese buying patterns or trade policy could quickly alter demand expectations. Other wildcards include biofuel margins, which affect both corn and soybean demand.
For now, the WASDE has set a clear narrative: an even bigger U.S. corn crop weighing on prices, soybeans finding support from a tighter balance sheet, and wheat still under pressure from global surplus. The contango structure across grains reflects the market's comfort with near-term supply—but as harvest progresses and weather patterns shift, that confidence may yet be tested.
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