A major part of the latest USDA global supply and demand report has been ignored. Even with elevated production on corn, soybeans, and wheat, global ending stocks are forecast to tighten.

The world corn crop is projected at 1.29 billion metric tons by the USDA, a large 62.6 million mt more than a year ago. Even with this increase the world corn carryout is expected to decline 600,000 mt as added demand will easily absorb these bushels. In soybeans, global production is forecast to increase 2.4 mmt this year, but carryout will still decrease by 300,000 mt. The U.S. world wheat inventory is expected to tighten by 2.6 mmt this year, even as production increases by 7 mmt. These contractions make it more necessary for global production to continue increasing as well.

More estimates are starting to be released ahead of the upcoming production season in Brazil. The firm Agresource predicts a 2025/26 Brazil soybean crop of 176.5 million metric tons, up 3 percent from the 2024/25 crop. Agresource believes soybean plantings will expand by 2 percent this coming year to give us the larger crop. While higher, this expansion will be the smallest in the last five years. The Brazil corn crop is expected to increase just 0.7 percent from this year to total 138.4 mmt. High input costs and low commodity values are the primary reasons for the lack of expansion, but logistic restraints are also an issue. Given this low expansion rate and building domestic consumption we may see less export competition from Brazil even with the build in production.

The Russian firm IKAR also updated its wheat crop estimate. IKAR puts the Russian wheat crop at 86 mmt, up 500,000 mt from its previous estimate. Improved weather is the primary reason for the added production. IKAR made an equal increase to the country’s wheat export forecast, putting it at 43 mmt. Total Russian grain exports were also increased to 132.8 mmt. Questions are rising on the quality of Russia’s grain crops though, with several sources claiming they are below recent years.

Ukraine farmers are becoming increasingly concerned over the country’s fertilizer availability. The greatest concern is with seaward nitrogen imports that are currently suspended. The fear is this will create nitrogen supply shortages in the country and make prices unprofitable for farmer usage. Ukraine farmers point out this will only add to additional production losses as the country is already suffering from a major drought.

The U.S. harvest is going to start gaining momentum and this is starting to put some pressure on the U.S. cash market, but so far, this has been countered by favorable processing margins. Ethanol manufacturing is the most profitable right now at an average of 45 cents return per gallon of production. News that importers such as Vietnam are pushing ethanol blend rates higher continue to support ethanol margins. Vietnam is in the process of doubling its ethanol blend rate to 10 percent, which would add to an already growing U.S. export market. 

Soybean crush margin is also solid at nearly $2.00 per bushel. Crush margins on soybeans are at a two and a half month low though, and this has caused some soybean buyers to scale back purchases.

The National Corn Growers Association is showing more concern on future production economics. The NCGA is worried that even with a decline in corn production costs, farmers will face a third year of negative returns this coming year. Data from the NCGA shows the cost of production for corn has declined 3 percent from its all-time high in 2022. In 2022, the average cost of growing corn was $928.00 per acre. This declined to $897.00 per acre in 2025. The concern is that corn values are now half what they were in 2022, making the crop unprofitable for many producers.

Cattle futures are starting to correct from all-time highs. The annual fall run of calves has started and is being closely monitored as pasture conditions are very favorable with wheat being seeded into ample soil moisture. Feed grain is cheap though, and it currently is more economical to place feeders in lots rather than pastures. This trimmed feeder cattle demand right when inventory builds. The cash side led futures higher, and it appears it is going to lead the market lower as well. This is mostly seen in the feeder market where recent auction sales are well off from summer highs.

An interesting development in the U.S. cattle herd is taking place. More replacement dairy cattle are making their way into the milking line up and not into beef lots. The U.S. dairy herd at the end of July totaled 9.49 million head, an increase of 159,000 head from July 2024. July’s total was up 10,000 head from the June number as well. These rising cow numbers led to a 3.5 percent increase in milk production for July from a year ago. The market is monitoring this expansion for signs of weakness in milk futures.

While Mexican officials have stated several times the country is working to contain New World Screwworm in livestock, data from sources in the country suggests otherwise. Data from the country indicates there were 5,086 cases of New World Screwworm in the country as of August 17th, a sizable 53 percent increase from mid-July. There are also 649 open cases of the highly infectious disease showing there is little control over it. This growing number of cases shows Mexico has little control over the outbreak, further delaying the reopening of cattle trade between Mexico and the United States.

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