The highly anticipated September WASDE report released last Friday brought several adjustments to the corn and soybean balance sheets. The biggest surprise was USDA again increased corn acres, now pegged at 98.7 million (3.5 million higher than the June estimate). The department also revised soybean acres slightly higher after dropping 2.5 million acres last month.
Despite yield reductions for both crops, production still increased. Changes in demand muted the impact on ending stocks. USDA:
- raised corn demand by another 100 million bushels
- trimmed soybean demand by 20 million bushels due to weak Chinese buying.
As a result, 2025-26 corn carryout was lowered by just 7 million bushels to 2.1 billion bushels, while soybean carryout rose 10 million bushels to 300 million bushels.
So, why did the market rally into Friday’s close on what should have been bearish news? In my opinion, two key factors supported futures after the report:
- Technical strength on the corn charts
- Expectations that USDA yield projections remain too high
Technicals lead the way
Let’s start with the charts. Below is the December ’25 corn chart. Since early spring, this market has been in an ongoing downtrend. Pay attention to the sequence of highs and lows. From April through the August crop report, the market consistently made lower highs and lower lows, pushing the RSI (red line at the bottom of the chart) to very weak levels.
However, after the Aug. 12 report (which added 2.1 million corn acres and raised projected yield by 7.8 bushels) the market fell to a contract low of $3.92 and has climbed ever since.
Since that low, December corn has been making higher highs and higher lows, and the RSI has risen to its strongest level since May. This shift in momentum caused traders to flip their mindset: Instead of selling rallies, they now are buying dips.
USDA yield numbers in question
Corn futures trended lower all summer on the expectation that USDA would increase yield, thanks to near-perfect growing conditions. Ahead of the August report, the market was working with a trendline yield of 181 bpa. Traders anticipated an upward adjustment, so even the “monster” 188.8 bpa estimate USDA published was largely priced in.
Now, halfway through September, yield expectations look much different. An abnormally dry August drastically cut prospects in many regions. It’s no secret that August rainfall is critical for grain fill in corn.
With widespread dryness, traders doubt USDA’s 186.7 bpa projection is realistic. That belief started fueling a rally in mid-August.
From the Aug. 12 low to the Sept. 12 high, December corn rallied 38¼ cents, its best move since January-February. Friday’s rally stalled just shy of major resistance at $4.32¾ (the top of the July 4th gap), with a high of $4.30¼. On Monday, futures pulled back sharply but held the uptrend.
I wouldn’t be surprised to see additional short-term selling, but momentum suggests the broader move higher may continue.
If you have any questions or would like advice on navigating these markets during harvest, please don’t hesitate to reach out to me or any of the AgMarket.Net brokers. You may reach me directly at 309-454-9270 or anyone on the AgMarket.Net team at 844-4AG-MRKT. We’d be happy to help. Good luck with harvest and stay safe!
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