USDA Report Leaves Markets “Stuck in the Mud” with Quiet Updates and 2026 Supply Questions

USDA Report Leaves Markets “Stuck in the Mud” with Quiet Updates and 2026 Supply Questions

The U.S. Department of Agriculture’s latest World Agricultural Supply and Demand Estimates (WASDE) report landed with a softer impact than usual this February, offering few major surprises to shake up the grain markets. Rich Nelson of Allendale Inc. joined Farm Director KC Sheperd to break down the numbers, describing a report that largely maintained the status quo while hinting at longer-term supply challenges for 2026.

According to Nelson, the February report is typically a “quiet” one for the USDA, as the agency has already finalized production numbers for the previous year’s crops in January. Consequently, the current focus has shifted almost entirely to minor demand changes rather than supply shocks.

Wheat & Cotton: Global Competition and Downtrends The wheat outlook remains subdued. The USDA showed a light increase in domestic ending stocks, driven by changes in food use rather than exports. On the global stage, Nelson pointed out that World balance sheet numbers are finally firming up for the 2025 harvest. A key watch-out is Russia, which is currently behind on its export pace and could become a “heavy competitor” in the coming months as they try to catch up.

Cotton producers continue to face a “long-term downtrend,” with Nelson observing no firm bottom in the market yet. The USDA lowered its export viewpoint and raised ending stocks from 4.2 to 4.4 million bales, reinforcing the bearish sentiment.

Corn: Prices “Stuck in the Mud” Despite Export Adjustments The USDA lowered U.S. corn stocks by 100 million bushels, a move driven by a reduction in exports. However, Nelson noted that the trade is skeptical of the government’s math, believing the USDA missed concerns regarding corn usage for ethanol.

Despite the adjustment, market reaction has been tepid. Nelson noted that the 2025 corn harvest was even more efficient than the previous year’s, contributing to market heaviness. “Prices are stuck in the mud,” Nelson said, referring to corn futures hovering around $4.20. He suggested that without a significant weather event or new acreage scares, the market may struggle to find bullish momentum.

Soybeans: Waiting on Biofuel Policy The soybean balance sheet saw almost no changes in domestic numbers for crush or exports. Nelson argued that the crush number should likely have been raised, but the USDA appears to be waiting for the new biofuel policy expected in March before making aggressive adjustments.

Internationally, the USDA raised its estimate for Brazilian soybean production by 2 million tons, bringing the total to 180 million tons. While a large number, Nelson dismissed it as a “non-market mover,” noting that the trade had largely anticipated a big Brazilian crop. He also touched on the discrepancy between market rumors and reality regarding trade with China. While there has been talk of China purchasing 20 million tons of U.S. soy, Nelson stated that current market activity doesn’t reflect such volume yet, though he sees “light upside” potential for prices if those purchases materialize.

Livestock: A Slow-Walk to Higher 2026 Beef Production On the livestock front, the USDA is slowly adjusting its view on 2026 beef production. The agency added nearly 200 million pounds to its 2026 production estimate. Despite this increase, 2026 production is still forecast to decline by 0.3% compared to 2025. However, when factoring in imports, the total beef supply offered to consumers in 2026 is expected to be larger than in 2025.

Pork saw a similar “light increase” in production forecasts for 2026, suggesting slightly higher supplies next year.

Looking Ahead, Nelson advised producers to keep an eye on several key dates in the coming weeks that could finally wake up the markets:

Late February: The USDA Ag Forum will provide the first look at new crop acreage estimates for the upcoming season.
March: New biofuel policies are expected to be released, which could impact soy and corn demand.
March 31: The Prospective Plantings report will offer concrete data on what farmers intend to plant in 2026.