Grain Spreads: Gut Punch

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Commentary

Fears were realized yesterday as the powers at be from the USDA raised corn yield 0.5 bushels per acre to 186.5 versus where most analysts were at, guesstimating 184 bushels per acre. Sadly, this wasn’t the biggest surprise. Harvested acres came in at a whopping 91.3 million acres versus the average guess of 90 million acres, which is where the USDA was at in December. I’m not sure how you find 1.3 million acres from month on month during the holidays no less, but funds trade the numbers given first and ask questions later.  This acreage number to me is a farce given today’s technology following a 7-week government shutdown. Late season drought failed to reduce record yields according to USDA, where beneficial crop gains in fringe areas particularly in the North made up for damage in the Eastern belt. Revisions will be forthcoming as they always do but I wouldn’t count on anything significant until the quarterly report late September or early 2027 sadly. Ending stocks for corn swell to 2.227 billion bushels. The USDA tried to soften the blow in regards to usage as to not really swell ending stocks further. But that just raises more questions in my view as the math doesn’t add up as the USDA increased this year’s corn feed usage by 100 million bushels, after lowering last year’s feed usage once again. As such, it has this year’s feed usage up by 746 million bushels from last year’s level, even though we’re feeding fewer animals with the border with Mexico closed for the foreseeable future. March corn post report has fallen through key support and hit our first downside target at 4.18. That level represents 5% down for the year, as we closed 2025 at 4.40. The next downside target could be 3.96 in corn, which represents 10% down. Corn needs a story or two to erode the bearish sentiment. As if the USDA domestic data wasn’t enough, USDA raised World ending stocks to 290 million metric tons versus 279.15 in December. A weather market down in South America for the Feb-April time frame. 

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Sean Lusk

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