The key takeaway from Tuesday's USDA reports is to keep in mind they are not about fundamental transparency, but rather generating trade volume.
US grain stocks as of March 1 should still run well above what was seen at the end of the same quarter last year.
Join 200K+ Subscribers: Find out why the midday Barchart Brief newsletter is a must-read for thousands daily.A change in planted acres guesses will depend on if USDA accounts for skyrocketing input costs during March. If not, the big adjustments could come in the June update.
Morning Summary: Before we get to the Grains sector, where industry talking heads will be obsessed with USDA’s Prospective Plantings report set for release at noon (ET), let’s take a quick look at what’s going on elsewhere. Today is also the end of the fiscal quarter for most investment interests, and it has been a rough Q1 for US stock indexes. Heading into Tuesday’s session the S&P 500 ($INX) is 501 points (7.3%) for the quarter, not catastrophic but certainly not good. Given the S&P hit a new high of 7,002 early in the month, the much discussed 20% retracement level is down near 5,602. The Index closed Monday at 6,343. On the other hand, the US dollar index ($DXY) is up 2.11 (2.1%) for the quarter, supported by the idea the US War on Iran, and subsequent inflation, could force the Federal Open Market Committee to raise rates during 2026 rather than make the cut demanded from on high. And now, the Grains. If I can give you one key takeaway from today’s third first look at 2026 US planted area guesses from USDA it would be this: These reports are not about supply and demand transparency. They are about generating trade volume, which is why they are released during trading hours.
Corn: What should we expect in today’s quarterly Stocks and annual Prospective Plantings reports? Starting with stocks, the numbers will be for the end of February, Q2 in corn and soybeans. Recall the Q1 stocks figure at the end of November was 13.262 billion bushels (bb), up 10% from the same quarter the previous year and the largest Q1 stocks number on record. We can assume from subsequent monthly Cattle on Feed reports, feed demand for US corn did not increase this past quarter. As for exports, total sales at the end of November (Q1) were 1.75 bb. At the end of February this had climbed to 2.56 bb. At the end of February, national average basis was 31.0 cents under the nearby futures contract, not that much different than then end of November’s 33.5 cents under. The May-July futures spread covered 36% calculated full commercial carry at the end of Q2 versus Q1’s settlement of 25%. The bottom line is there was more corn on hand in relation to demand. As for planted area guesses: It will depend on if USDA considers skyrocketing input costs during March. If so, corn could lose more acres to soybeans from what we’ve already seen in USDA’s baseline projections and annual Ag Outlook Forum presentations.
Soybeans: If USDA does account for the burdensome bounce in input costs for US corn production during March, it would not be surprising to see expected soybean acres grow again. In January, USDA put the “final” 2025 planted figure at 81.2 million acres (ma), down 6.2 ma (7%) from 2024. The baseline projection came in at 85.0 ma, a switch of 3.8 ma with corn from the previous year and left at 85.0 ma at USDA’s Ag Outlook Forum. At the end of November, the Nov26-Jan27 futures spread covered 28% calculated full commercial carry. At the end of February, the spread was covering 38%, roughly where it was at Monday afternoon’s settlement. This tells us the commercial side is not expecting a big addition in acres in the Prospective Plantings report, leaving the June update for USDA to make another change. But anything is possible if we keep in mind these reports are about creating trade volume. As for quarterly stocks, the US reportedly had 3.29 bb at the end of Q1, up 6% from the same time the previous year and the largest soybean stocks on hand as of December 1 since 2018’s 3.746 bb. Total export sales continued to run 18% behind the previous marketing year at the end of Q2.
Wheat: The stocks number for wheat will mark the end of Q3. At the end of November, all US wheat on hand came in at 1.675 bb, up 6% from the previous Q2 figure of 1.573 bb and the largest since November 2020’s 1.703 bb. National average basis has stayed weak for all three major wheat markets, though HRS was strong during Q2 (December through February) before collapsing on the roll from March futures to May. On the export front, US total sales of all wheat were running 23% of the previous marketing year at the end of November with the lead trimmed to 14% at the end of February. The pace projection based on shipments held steady, basically, last quarter, coming in at the last week of February at 935 mb as compared to the last week of November’s 931 mb. If US all wheat stocks hold to trend, the March 1 number could be near 1.3 bb with the 2026 harvest just around the corner. In case anyone was wondering, no, the US is not running out of wheat. What about acres? The issue isn’t necessarily quantity but quality. The US Southern Plains HRW could be looking at some quality concerns due to drought and freeze.
On the date of publication, Darin Newsom did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
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