Corn planting in the United States was completed in a short amount of time, and historically a fast corn planting season leads to more corn acres. High input costs and the early start to U.S. soybean planting prevented these additional plantings. What is more of a topic now is how many harvested acres we will see on corn. It is interesting to note the USDA pointed out corn harvested acres will be down 4 percent this year from last at 87.4 million. The Eastern Corn Belt may elevate this number in the future as more reports of acre abandonment are coming in.

Another set of numbers that are supportive was last quarter’s indicated demand. Compared to the prior year, corn disappearance was up 9 percent, soybean usage was up 18 percent, and wheat consumption increased slightly. This elevated demand was most supportive for soybeans as trade has been focused on export demand most of the marketing year and overlooking domestic usage. This added demand also makes it critical for the United States to produce record crops every year.

The ratio between corn and soybeans continues to widen and is now favoring soybean production even more. The current ratio between corn and soybeans is 2.65:1, wider than the typical 2.5:1. What is most noticeable about this is that just 60 days ago the ratio was 2.35:1. This tighter ratio was the result of high input costs in the U.S. These costs are now a factor for South America and soybean plantings, and the need to push for soybean acres is taking place.

A need for soybean production in South America is rising as Indian officials claim monsoon rains are down 40 percent from normal for the country. This has India suffering its 5th worst drought on record and is likely cutting into palm oil production. If this situation worsens, it will give the U.S. soybean complex as the marketing year progresses as well.

One thing that is becoming more evident in this year’s crops than those in recent history is high variability. This year’s crops are seeing wide ranges in conditions from not just East Corn Belt to West, but across states and even counties. The area of the U.S. seeing the best crops is the Upper Western Belt, mainly Iowa and Minnesota. Other regions of the U.S. are seeing very good crops as well, but they become more varied outside of this area. In the East, the most concern is excessive rain in the Ohio Valley and drying conditions in Michigan. In the West, the concern is on drought stress in the Plains, with some areas fearing they will deplete irrigation reserves prior to harvest.

These varying crop conditions are being noted in the weekly crop reports from the USDA. The ratings of both corn and soybeans are below last year, and we have seen numbers deteriorate from the start of the reporting cycle. Part of this is due to more of the crop being included in reports, but also from elevated crop stress. What trade is starting to focus on is the rising volume of Poor/Very Poor rating on corn and soybeans, as this elevates fears of yield loss. With both corn and soybeans sitting right at rationing levels, and indication of yield loss is concerning.

Declining crop ratings and production worries have impacted the cash markets as well. U.S. farmers have shown little interest in marketing old crop inventory at this time as all attention has been on fieldwork. This has tightened inventories in cash markets across the interior market, forcing basis values to tighten. Processing margins are off their highs in both ethanol and soybean crush, but still remain at historically favorable levels. Buyers continue to push bids to secure what inventory they can to capture these returns.

Trade is also starting to monitor the increase in new crop commodity demand. Sales of corn, soybeans and wheat for the 2026/27 marketing year are all above last year’s volumes. Soybeans are seeing the most benefit from this as China is now starting to book new crop needs.

The most interesting scenario that is starting to be monitored is in new crop corn. Cumulative new crop corn sales are already up 50 percent from last year, and that pace was above average to start as well. Old crop corn commitments have topped USDA expectations for the year, indicating we will see lower old crop carryout and new crop carryin. This year’s corn production is already expected to fall 250 million bu short of demand in the 2026/27 marketing year, and this elevated demand is likely to tighten them even more, especially if we start to see production issues.

The impacts of the El Nino weather system are starting to become more noticeable in the global market. The most noticeable of these are in Australia and the European Union, where major droughts are being reported. China is also starting to turn hot and dry as its corn crop starts to pollinate. South America is seeing less than ideal growing conditions as well. Closer to home the U.S. is seeing favorable crop conditions in the Western Corn Belt, but these rapidly decline as you move East.

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