USDA’s Sept. 12 World Agricultural Supply And Demand Estimates won’t be the last word on 2025 crops, not by a long shot. But traders will focus on the updated forecasts nonetheless — at least until the next bright, shiny object captures the market’s attention.
That distraction could come quickly on the heels of the WASDE, after a weak jobs report put out Sept. 5 made lower interest rates all but a done deal. Indeed, betting on Federal Funds Futures suggested a cut of at least a ¼ of 1% is 100% likely when the Fed meets Sept. 16-17. Indeed, calls for three cuts by the end of 2025 gained traction, creating dynamics that could skew the WASDE’s impact, regardless of what the data shows for supply and demand for corn and soybeans.
Lower interest rates could weaken the dollar, which can fuel higher commodity prices if investors rush into hard assets. Cooler heads may well think twice about buying grains, because big U.S. crops this fall could add to surpluses, increasing momentum for a selloff. And of course, anyone buying corn or soybeans risks steps into a minefield of uncertainty that includes explosions from tariffs and potential government shutdowns.
Record yield projections persist
The first issue is the size of 2025 crops. I estimate production based on weekly Crop Progress ratings and satellite vegetation maps. Both metrics improved for corn since the government last gathered data a month ago.
August Crop Production from USDA pegged corn at 16.7 billion bushels based on yields of 188.8 bushels per acre, which would both easily be records. Crop Progress ratings dropped in the latest week, which is not unusual as fields mature. This translates into a yield of 189.5 bpa. Vegetation health maps are even more optimistic at 194 bpa.
My projection based on the VHI for soybeans is also higher than a month ago, taking yields to 55.4 bpa. The Crop Progress-based yield estimate actually slipped slightly from last month, but is still 55 bpa or better, for total production of 4.4 billion bushels.
USDA put the yield at 53.6 bpa in August, for a crop just under 4.3 billion. That would be the fourth biggest crop ever.
Will lower prices motivate buyers?
Big crops don’t necessarily mean lower prices, as long as demand is robust enough to whittle down the surplus. In a perfect world having more of something to sell usually means you sell more of it – as long as prices are competitive.
Unfortunately, my models suggest even lower prices may not motivate buyers enough to make a difference.
Livestock producers and ethanol plants could take more corn than they did during the 2024 marketing year that ended Aug. 31, but only incrementally. That would leave demand from foreign buyers as the key swing factor. Exports do look ready to rise, perhaps up to record levels, topping 3 billion bushels for the first time. Even that success wouldn’t be enough to keep piles from building past 2.3 billion bushels, potentially lowering the average cash price received by farmers to $3.70 a bushel, down 20 cents from USDA’s August print.
Brazil launches WTO dispute
Soybean demand wouldn’t be all bad. Crush could be even stronger than the 2.54 billion bushels the government forecast in August. But exports could slip to the lowest total in more than a decade, some 200 million bushels less than for the 2024 crop.
Soybean exports are perhaps the biggest wild card in this forecast, hinging on what China does amidst trade angst. If my model’s output holds, the surplus a year from now could top 400 million bushels, the most since the original trade war with China.
Brazil is also a key actor in this melodrama, filing a dispute with the World Trade Organization after being hit with 50% tariffs and friction involving former president Jair Bolsonaro.
USDA in August forecast average cash prices of just $10.10, suggesting sub-$10 soybeans are a threat. November futures held $10 last week, trying to avoid the next leg down.