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September WASDE Preview
Last month, the USDA dramatically increased U.S. corn yield and production estimates while curtailing soybean planted area. Both corn and soybean yields are projected to be at record highs due to the ideal planting and early growing season conditions. However, finishing weather has been a concern. Prolonged dryness in August across the corn belt is expected to weigh on yield estimates, and the September WASDE offers our first glimpse at subjective yield data estimates.
Weather & Yield
The weather has been a concern across the corn belt since the last WASDE report was issued. The month of August was particularly dry, which is likely going to weigh on yield estimates for both corn and soybeans in this month’s report. Drought conditions as measured by soil moisture data across the Midwest declined sharply through the balance of August. Key areas, like Central Illinois, are the driest they’ve been in more than 5 years. In late August, the drought stress index flirted with breaking above the 5-year average range, but conditions are starting to improve as we progress through September. The question is, are the rains too little and too late? The increased stress in August will likely have a more pronounced impact on soybean yields than they were on corn.
Corn:
Quick Facts
- Both U.S. production and yields are projected at record highs.
- Ending stocks are projected at the highest level since 2019.
- Accumulated exports for 2024/25 are on the best pace in more than 10 years, and closely tracking 2020/21’s strong performance.
- New crop 2025/26 accumulated exports slightly lag 2020/21’s early performance, but remain above the 5-year average.
- Aug E/S: 2,117 mln bu
- Aug Stocks / Use: 13.27
What to Watch For
- Total U.S. Corn production estimates
- Yield adjustments
- Domestic use tendencies
Commentary
This is the first WASDE report in which subjective, on-field data will be incorporated into yield estimates. If the results from the Pro Farmer Crop Tour are any indication, USDA is way over its skis with the 188.8 estimate. However, the question is whether the U.S. corn crop is still getting bigger or not. Further increases to production place a heavier burden on swelling ending stocks. Domestic and export demand have been strong for corn, but that effect is dampened if production keeps ticking higher. An unchanged or lower-than-expected increase in production could help corn futures maintain the recent trend of higher-highs and higher-lows.
Soybeans:
Quick Facts
- Soybean planted area is at its second-lowest level in the last decade, ahead of only 2020’s 76.1 mil acres.
- The expected harvested area for 2025/26 soybeans is 5.971 mil acres below last year’s realized harvested area of 86.1 mil acres.
- Last September, USDA pegged soybean yields at 53.1 bpa, and realized yield was 2.4 bpa lower at 50.7 bpa.
- U.S. soybeans are the cheapest in the Western Hemisphere by a considerable margin.
What to Watch For
- 2025/26 export projections
- Chinese soybean imports
- Yield adjustments
Commentary
Unlike corn, we know the American soybean crop is shrinking. Last month’s 1.9 million acre reduction to planted area was arguably a “bigger deal” than the eye-popping corn yield estimate because it instantly made an average-sized crop into a relatively small crop. The biggest inhibitor to a sustained rally in soybeans has been the lack of Chinese demand. Now that U.S. soybeans are the cheapest in the world on an FOB basis, the question is whether or not China comes to the table. Despite China’s absence, U.S. soybean export demand has been solid, with accumulated sales within the 10-year average range. So, what does the soybean market look like if China plays ball? If you’re going to use historical stocks-to-use data relative to the current price, the argument can be made that soybeans are currently undervalued.
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