Did WASDE’s December report set the stage for a corn rally?
What’s Happened…
On December 9, The USDA released the monthly World Agriculture Supply and Demand Estimates (WASDE). Prior to the report release, an average of analysts’ estimates is compiled for key figures. The report contains many numbers that are called line items. These would include items such as acreage, yield, feed usage, exports, and many others. A simpler overview, however, is that the report estimates total supply and total demand. When these numbers are added together, there is one figure that is left, called ending stocks. Ending stocks are the number of bushels expected to be left over at the end of the marketing year. For corn, the end of the marketing year is the end of August. The pre–report estimate for ending stocks was 2.166 billion bushes (bb). The actual figure was 2.099 bb, due to an increase in export demand.
Why this is Important…
The USDA does not publish a yield estimate in the December report. The final yield estimate will come in January. The most recent bushels per acre (bpa) estimate, released in December, is 186. In 2024, a national record yield was notched at 179.3 bpa. For many, 2025 was an outstanding production season. However, for others, it was not. Expecting the average yield to increase nearly 7 bushels above last year’s all-time record high yield in a year of increased corn acres seems too aggressive for many. Variability of yield was noted in key–producing states, as many producers saw a yield drawdown due to disease pressure, dry weather, or both. The bottom line is the yield number may decline in January. Unless demand is lowered, a smaller yield reduces carryout. A yield decline to 180 bpa suggests ending stocks could decline to under 1.5 bb, a figure that would suggest higher prices.
What can you do about it?
Feed buyers should consider shifting the risk associated with a projected smaller carryout. You can forward buy expected usage or buy cash corn as needed. Purchasing call options or going long futures will protect against future higher prices.
Corn producers can re-own with call option strategies that have a fixed risk component. If you are willing to take market risk after bushels are sold, buy futures. Stop orders can be used to manage futures risk.
Connect with your advisor for a strategy that may be best suited for your operation and risk tolerances. Plan while the markets are trading quietly so you are ready when prices do move.
Find out what works for you…
Work with a professional to find the strategy or strategies that are best suited for your operation. Communication is important. Ask critical questions and garner a full comprehension of consequences and potential rewards before executing. The idea is to make good decisions for the operation and less emotionally–charged responses to market moves, which are always dynamic.
About the Author: With the wisdom of over 36 years at Total Farm Marketing and following across the Grain Belt, Bryan Doherty is deeply passionate about his clients, their success, and long-term, fruitful relationships. As a senior market advisor and vice president of Brokerage Solutions, Doherty lives and breathes farm marketing. He has an in-depth understanding of the markets and marketing tools, a strong listener, and communicates with intent and clarity to ensure clients are comfortable with their decisions.
The data contained herein is believed to be drawn from reliable sources but cannot be guaranteed. Individuals acting on this information are responsible for their own actions. Commodity trading may not be suitable for all recipients of this report. Futures and options trading involve significant risk of loss and may not be suitable for everyone. Therefore, carefully consider whether such trading is suitable for you in light of your financial condition. Examples of seasonal price moves or extreme market conditions are not meant to imply that such moves or conditions are common occurrences or likely to occur. Futures prices have already factored in the seasonal aspects of supply and demand. No representation is being made that scenario planning, strategy or discipline will guarantee success or profits. Any decisions you may make to buy, sell or hold a futures or options position on such research are entirely your own and not in any way deemed to be endorsed by or attributed to Total Farm Marketing. Total Farm Marketing and TFM refer to Stewart-Peterson Group Inc., Stewart-Peterson Inc., and SP Risk Services LLC. Stewart-Peterson Group Inc. is registered with the Commodity Futures Trading Commission (CFTC) as an introducing broker and is a member of National Futures Association. SP Risk Services, LLC is an insurance agency and an equal opportunity provider. Stewart-Peterson Inc. is a publishing company. A customer may have relationships with all three companies. SP Risk Services LLC and Stewart-Peterson Inc. are wholly owned by Stewart-Peterson Group Inc. unless otherwise noted, services referenced are services of Stewart-Peterson Group Inc. Presented for solicitation.
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Bryan Doherty