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Insight Focus
The USDA surprised markets with record corn output. Corn plunged in Chicago while wheat traded flat, with record Argentine wheat production reinforcing the bearish tone. With the WASDE report now digested, focus should shift to geopolitical risks, while ample supply caps prices and keeps Chicago corn in a USD 4.3–4.5/bushel range through Q1.
The USDA surprised the market with a record corn crop, higher quarterly stocks and additional supply in wheat and soybeans. Wheat production in Argentina also reached a record. Corn plummeted in Chicago, while wheat traded flat.
Geopolitical issues also emerged last week, with Trump announcing 25% tariffs on countries trading with Iran—something that could put the US-China trade deal from October last year at risk—as well as 10% tariffs on European countries that participated in a military exercise in Greenland.
Following the publication of the WASDE last Monday, we think the market has already priced in all of the bearish news. In the short term, the market is likely to focus on geopolitical implications, as a deterioration of the US-China trade agreement could halt Chinese purchases of US soybeans, while the Greenland issue could spark a retaliation from European countries.
Ample supply should put a cap in the market, but we could see short-term rallies depending on how trade tensions evolve. We continue to expect Chicago corn to trade in a USD 4.3–4.5/bushel range throughout Q1.
There are no changes to our estimate for Chicago corn to average USD 4.18/bushel during the 2025/26 (September/August) crop, with some upside bias. The average price since September 1 is running at USD 4.27/bushel.
Bearish WASDE Pressures Chicago Corn
Corn sold off in Chicago last Monday right after the publication of a bearish WASDE, which went in the opposite direction of market expectations. It then consolidated the losses and traded sideways through the end of the week.
The January WASDE increased US corn ending stocks by a sizable 198 million bushels, with virtually all of it coming from 269 million bushels of higher production (1.3 million acres more and 500,000 bushels/acre higher yield), partially offset by 90 million bushels of higher consumption. Exports were left unchanged. The market was expecting a reduction in yield rather than an increase, hence the selloff after the publication.
Source: USDA
World corn stocks were increased by 11.8 million tonnes, and besides the 6.8 million tonnes of higher US production, Chinese production was also revised higher by 6.2 million tonnes.
The Rosario Board of Trade in Argentina increased its corn production forecast to 62 million tonnes for the 2025/26 crop, up from 61 million tonnes previously. Conab in Brazil left its corn production forecast unchanged at 138.9 million tonnes for the 2025/26 crop, versus 141 million tonnes produced in 2024/25.
The USDA also published its quarterly stocks report last Monday, which was also bearish. Corn stocks as of December 1 came in at 13.3 billion bushels, up from 12.07 billion bushels last year and above the 12.96 billion bushels expected by the market.
Source: USDA
Corn planting in Argentina is 91.7% complete, with 93% rated in good or excellent condition. Summer corn planting in Brazil is 89.9% complete versus 87.1% last year and the five-year average of 85.7%. Summer corn harvesting in Brazil is 2.5% complete versus 2.3% last year and the five-year average of 4.2%.
Wheat Rallies Late but Bearish Fundamentals Persist
Wheat mirrored corn during the first half of the week but rallied last Friday, offsetting all losses and managing to close unchanged in Chicago, with small losses in Euronext.
On the wheat side, the January WASDE increased US ending stocks by 25 million bushels, all coming from lower demand, as production was left unchanged at 1.985 billion bushels.
World wheat stocks were increased by 3.4 million tonnes, entirely due to higher Argentinian production, which was revised 3.5 million tonnes higher.
Source: USDA
Argentinian wheat is fully harvested, with the official production figure at a record 27.8 million tonnes. Brazilian wheat is also fully harvested, and Conab published its official production figure at 7.8 million tonnes, down from 7.9 million tonnes in last month’s estimate and roughly flat year on year.
US wheat stocks as of December 1 came in at 1.68 billion bushels, up from 1.57 bill bushels last year and above the 1.64 billion bushels expected by the market.
To complete the bearish news, US winter wheat seedings came in at 32.9 million acres, up from 33.1 million acres last year and above the 32.4 million acres expected by the market.
Another cold wave is expected to bring below-average temperatures to most of Europe this week. In the Americas, Brazil is expected to receive rains alternating with sunny periods, favouring crop development, and similar weather is expected in Argentina. US grain regions are expected to see rain and cold weather, with snow in the north.
