Allendale’s Rich Nelson Analyzes USDA Small Grains Summary and Quarterly Grain Stocks

In a detailed market review, Allendale’s Rich Nelson broke down the USDA quarterly grain stocks and small grains summary with Farm Director KC Sheperd, outlining what shifting supply balances mean for producers navigating wheat, corn, and soybean marketing decisions. While old-crop and new-crop supply data presented both positive and bearish surprises, export headwinds and weather shifts across key growing regions continue to dictate market price action.

Wheat Outlook and the Quarterly Grain Stocks

The USDA finalized 2026 U.S. all-wheat production at 1.534 billion bushels in the Small Grains Summary, up roughly 3 million bushels from previous agency estimates. Despite that slight uptick, the quarterly grain stocks report provided underlying support by revealing stronger-than-expected first-quarter disappearance. September 1 wheat stocks were pegged at 1.85 billion bushels, coming in below trade expectations of 1.87 billion bushels.

Nelson pointed out that while overall U.S. wheat production fell by more than 400 million bushels year-over-year, first-quarter wheat-for-feed usage dropped by only 46 million bushels, reflecting aggressive feed residual demand from June through August.

Despite favorable domestic use, the market has not sustained a supply-driven rally. Nelson explained that the trade has steadily stripped out geopolitical risk premiums regarding the Black Sea, as U.S. export sales have not received any significant boost from Russian and Ukrainian supply concerns. Additionally, widespread rainfall across the Southern Plains ahead of the peak October 5 planting window has alleviated soil moisture concerns, taking pressure off acreage worries.

For producers with stored grain, Nelson noted that hard red winter wheat typically commands roughly a 15% protein premium over corn, which, combined with tight stocks, points to a theoretical Kansas City wheat value of $6.25 to $6.50 per bushel. Given current price action and the lack of an export catalyst, Nelson advised growers to consider taking advantage of current pricing rather than holding out indefinitely for higher levels.

Corn Impact from the Quarterly Grain Stocks

The September 1 quarterly grain stocks report delivered a notable bearish surprise for the corn market, officially closing out the old-crop marketing year. Old-crop ending stocks totaled approximately 2.1 billion bushels, exceeding average trade estimates by 177 million bushels.

That larger carry-in expands new-crop ending stocks into the 1.7 to 1.8 billion bushel range. Nelson indicated that while those stocks theoretically support December futures around $5.10, an ongoing lag in new-crop export commitments could reasonably pressure the December contract toward $4.75. Furthermore, after strong feed and residual disappearance across the first three quarters of the marketing year, feed usage dropped off sharply in the final quarter.

Soybean Demand and China Inquiries

For soybeans, the quarterly grain stocks showed September 1 supplies at 315 million bushels, down 10 million bushels from the trade consensus. Although this smaller carryover tightens the projected new-crop balance sheet toward 300 million bushels, Nelson noted that cash and futures prices are already trading above levels justified by that supply number.

The primary hurdle facing soybeans remains export demand. Nelson highlighted growing unease surrounding Chinese import commitments after recent resistance to trade discussions, raising doubts about whether China will fulfill prior agreements to take 25 million tons of U.S. supply. Continued export risk could weigh heavily on soybean pricing in the weeks ahead.

Key Watch Factors for October Trade

Looking ahead to October trade and the upcoming October 9 supply and demand report, Nelson identified two critical factors for market participants to monitor.

First, heavy Midwest rains are expected to delay harvest and introduce potential crop quality concerns, though they are unlikely to cause major yield losses for corn or soybeans. Second, the trade will watch closely for USDA adjustments to export targets. While federal balance sheets may not fully reflect export sales deficits in the immediate October report, prolonged demand weakness will likely force downward revisions later in the marketing year.

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