The USDA Ag Outlook Forum in Arlington, Va., held a few surprises for trade. This event kicked off with supply and demand estimates for the 2025/26 U.S. production season. For corn, the forum is predicting U.S. plantings of 94 million acres compared to 90.6 last year. Corn production is forecast at 15.585 billion bu versus 14.9 bbu last year. Ethanol demand on corn is forecast at 5.5 bbu and feed/residual at 5.9 bbu. Corn carryout is expected to come in at 1.965 bbu, up from this year’s 1.54 bbu.

On soybeans, the forum is predicting planted acres of 84 million, 3.1 million fewer than last year. Soybean production is forecast to remain steady at 4.37 bbu, however. Soybean crush is estimated at 2.475 bbu and exports at 1.865 bbu. Soybean ending stocks are forecast to decline to 320 mbu for the 25/26 marketing year compared to a 380 mbu estimate for this year.

Total U.S. wheat acres are forecast at 47 million, up from last year’s 46.1 million. Wheat production is expected to total 1.93 bbu, down from last year’s 1.97 bbu. Ending stocks are forecast to increase to 826 mbu from this year’s 794 mbu projection.

The Outlook Forum also updated its beef and pork balance sheets for 2025. Beef production is now estimated at 26.6 billion pounds, down 2 percent from 2024. Yearly pork production is forecast at 28.5 billion pounds, a 3 percent increase from 2024.

One of the most interesting data points from the USDA is the expected ag trade balance. The USDA is predicting 2025 U.S. farm exports of $170.5 billion. This includes $30.2 billion of sales to Mexico, $28.4 billion to Canada, and $22 billion to China. This compares to the U.S.’s 2024 farm export revenue of $174.4 billion. U.S. 2025 ag imports are forecast at $219.5 billion, up from last year’s $206.2 billion.

Even though Brazil’s soybean harvest has been slow this year, more crop is being sold. An estimated 39 percent of this year’s Brazilian soybean crop has been sold compared to 32 percent a year ago. This is not as much from improved soybean values as it is from currency valuations. The U.S. dollar has been trading at elevated values while the Brazilian real has been at all-time lows. Brazilian farmers can generate more income in this scenario as all South American sales are based on the U.S. currency. These elevated sales have started to slow down demand for U.S. soybeans, which is not a surprise. While Brazilian soybean sales are up from last year, they are below the 43 percent five-year average.

The United States is the primary corn export source in the global market right now, but we are seeing some competition. While some of this is from South America, more is coming from Ukraine. Ukraine exported 2.5 mmt of corn in January and is expected to ship an equal volume this month. Year-to-date Ukraine corn exports now stand at 12.4 mmt. Ukraine has an export quota on corn of 22 mmt this year out of their 26 mmt crop.

Cancellations were noted in recent export sales reports for both corn and soybeans. To see some cancellations this time of year is not uncommon as importers tend to double book needs for the transition from the U.S. export season to South America’s export program. While we have seen delays to Brazil’s soybean harvest, exports will start to increase, likely at a lower value than current bookings. Unless we see massive cancellations, trade will be slow to react.

It is also possible that the previous sales that were cancelled were for shipment later in the marketing year. The delays to the start of Brazil’s soybean harvest also means harvest will likely be prolonged. As a result, Brazil will still be exporting soybeans at the start of the U.S. export program.

More talk has surfaced in the market surrounding current U.S. drought reports. Data indicates U.S. corn, soybeans, and wheat production areas are showing higher drought levels than a year ago. A lack of snow cover and ongoing evaporation of what soil moisture there is, has created these conditions.

While this is becoming a market topic, drought during winter months is not enough of an issue to rally futures. In fact, a dry start to the U.S. planting and growing season tends to be negative for futures as they lead to early, rapid seeding paces. It will likely take getting past the spring planting season for drought to be a major factor, but we may see more risk buying than normal given the tightening U.S. stocks to use.

The February Consumer Confidence reading was well below street expectations and is causing concern for commodity demand outlooks. This tool is used to measure U.S. consumer outlooks on income and the labor markets. The February index reading came in at 98.3, well below the 102.4 that was expected and the prior index reading of 105.3. This was the third consecutive month of declining confidence in the U.S. economy and puts the index at the bottom of a three-year range. The February decline was also the largest since August 2021. The Expectations Outlook index dropped to a reading of 72.9 in February. This is concerning as readings below 80 tend to indicate recessions.

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