Big Crop Breakdown: Examining USDA’s First MY 25/26 Corn Projections

USDA released its first official look at the corn balance sheet for 2025/26 on May 12, 2025, forecasting record crops for both the United States and the world in the May World Agricultural Supply and Demand Estimates (WASDE) Report. As trade and domestic policy have no doubt been some of the most significant price drivers for both the old and new crop corns, it's worth noting that USDA's analysts use a "policy in place" approach, only considering official policies that have started by the time of WASDE publication or have formal end dates. It can be expected that policy will continue to be a major force in markets and will be critical to corn growers as they finish out the 2024 crop and look towards the new marketing year.

Supply: For the 2025/26 marketing year, the May WASDE maintained USDA's trend-projected yield forecast of 181 bu/acre from the earlier Ag Outlook forum in February, coupling it with an expected planted area of 95.3 million acres. If realized, this would be the largest number of acres planted to corn in more than a decade and, in concert with the yield projection, lead to a record 15.8 billion bushel production outlook. On the old crop balance sheet, USDA revised 2024/25 carryout by 50 million bushels, drawing down beginning stocks to start off the new year balance sheet.

Distribution: Though the forecast for record U.S. and global production was no surprise to the market, there was much curiosity as to how USDA would distribute those supplies on its new crop balance sheet. USDA's expectations for stronger domestic use in 2025/26 is driven by higher feed and residual usage than 2024/25, while the volume of corn expected for ethanol use remains flat. Given USDA's policy in place approach, higher corn exports are expected for 2025/26 on advantageous pricing, even against a larger export outlook for major competitors as well. Given the volatile trade environment, there could be many changes in export projections between now and the end of the 2025/26 marketing year, more than fifteen months from now. The current projection for strong exports and growth in domestic use is needed to use the record production expected. Ultimately, market outlooks prompted WASDE analysts to land 1.8 billion bushels in new crop ending stocks. Although this carryout is an increase of 325 million bushels from 2024/25, it remains below the burdensome 2.0-billion-bushel mark.

The Global Outlook: Record United States corn production is one driver in the forecast for record global corn production, but other major corn export nations are also expected to increase production. Despite the record global corn production, global corn consumption is forecast even higher. In line with the global pattern, major export competitor Brazil is expected to produce more corn. The expected for higher use in Brazil's own domestic markets, particularly for its growing corn ethanol market, limits export prospects and is expected to allow the United States to maintain its hold on the top global exporter position.

What does it mean? Though the global crop is large, global consumption is forecast to increase marginally more than production, leading to a drawdown in global stocks, particularly in major export competitor Brazil as it increases domestic use. The United States breaks the global pattern, however, with the aforementioned ending stock increases resulting in a 11.6% stocks-to-use ratio. This is higher than the current marketing year, but nearly equal to the stocks-to-use ratio for the 2023/24 marketing year. USDA's expectation for the 2025/26 season average farm price is $4.20 per bushel, down $0.15 from the current year and $0.35 from the 2023/24 marketing year with the same stocks-to-use ratio.

What's next: Uncertainty is not new for U.S. corn farmers, but even as planting progresses, there are many market dynamics that could change between now and harvest. Weather is always an unknown variable and will continue to be a major factor throughout the season as the market watches to see if that 181-bushel yield can be realized. We'll get more of an idea on the 95.3-million-acre number in June, when NASS releases the Acreage report after growers have had their chance to get corn in the ground. Trade and domestic policy will continue to shape markets as well, with biofuel legislation still evolving and the 90-day extension for most 'reciprocal tariff' trading partners paused until July 9, 2025, but a few new trade agreements that could benefit U.S. corn, DDGS, and ethanol are in the works.