Rich Nelson Breaks Down Neutral Wheat Balances, Corn Demand Risks, and Cattle Trade Dynamics

Farm Director KC Sheperd sat down with Allendale’s Rich Nelson to break down the latest World Agricultural Supply and Demand Estimates (WASDE) report from the USDA. While crop markets often brace for sharp surprises, Nelson characterized this month’s updates as largely routine, offering critical perspectives across wheat, row crops, cotton, and livestock.

Wheat Balance Sheets Hold Steady Amid Southern Hemisphere Harvest

Nelson led the discussion by examining the wheat balance sheet, noting that the USDA held domestic figures steady.

“As normal for this report, no changes or adjustments for U.S. wheat production, and that will also be the same on the December report,” Nelson said, noting that any minor revisions will likely wait until the January annual summary.

Export demand for U.S. wheat also saw no adjustments from the agency. “You can say that we’ve been running a clear deficit for quite a few weeks,” Nelson explained. “The last two weeks, weekly export sales were surprisingly positive, so we can see exactly why USDA chose not to make any adjustments there.”

On the international front, Nelson pointed out modest production increases among competing exporters, particularly across the Southern Hemisphere as harvest progresses from October through December.

“Even though these are not the largest producers that we have on the list, they are, for what they do produce, they generally export about 75% of production,” Nelson said of exporters like Argentina and Australia. “So they are aggressive exporters, and any change in production is immediately seen on the export side of things.”

Nelson added that weather patterns have yet to derail regional output: “The main message though is no real impact from the El Niño story so far on wheat production. That may change perhaps as we look towards the coming months for India, which harvest in April, but for now at least, no real bullish El Niño damage here.”

Addressing whether global supplies feel too comfortable, Nelson noted that ongoing Black Sea disruptions have not driven sustained rallies for domestic producers.

“The frustrating issue is even though Russia and Ukraine are running at deficits in exports, it’s not yet a story which has given the U.S. a long-term lasting support,” Nelson said, summarizing the report as “neutral for the U.S. side” while keeping eyes on broader international balances.

Corn and Soybeans: Minor Supply Trims, Lingering Demand Questions

Turning to feed grains, the USDA lowered domestic corn yield from 181.2 to 179.6 bushels per acre, finishing roughly 2% below starting trend lines. Soybean yields ticked up marginally by 0.2 bushels to 53.3 bushels per acre, standing 0.6% over starting trend. Domestic ending stocks contracted by roughly 100 million bushels for corn and 15 million bushels for soybeans.

Despite the slight tightening in domestic stocks, Nelson voiced caution regarding the USDA’s demand projections for corn.

“If there was a surprise, and certainly one thing which we have been watching, is we’re still a little concerned about USDA’s demand numbers,” Nelson stated. “As it stands, they did lower corn demand just a little bit, but keep in mind there is still a large deficit in needed corn export sales. So USDA more or less passed the buck on some negative information which may still be in front of us in a few months.”

Nelson added that historical precedent shows November WASDE reports rarely generate massive production shocks, noting that in 15 of the last 20 years, corn ending stock changes were held to 100 million bushels or less, while soybean adjustments stayed within 30 million bushels in 18 of the past 20 years.

Cotton Faces Yield Cuts and Demand Resistance

In the cotton sector, USDA trimmed domestic yields from 790 pounds per acre down to 775 pounds per acre, continuing a deficit compared to recent seasons (852 pounds and 892 pounds in prior years). Ending stocks dropped from 3.8 million bales to 3.7 million bales, while export projections were left untouched.

Despite lower yields, cotton prices have faced stiff resistance near the 78-cent mark. Nelson attributed this ceiling to quiet export demand and harvest acre dynamics.

“The main concern here is the fact that we do not yet have a nice, needed story which is really giving us a resurgence or change in the narrative,” Nelson said. “Even with this year’s yield decline, we are looking at a little more harvested acres than the prior two years.”

Livestock: Import Volumes Counter Lower Beef Output

The livestock updates reflected shifting market fundamentals, particularly for beef producers watching post-peak pricing patterns. While U.S. beef production was trimmed by roughly 38 million pounds, higher imports more than offset the tightening supply.

“USDA raises imports yet again by about 90 million pounds,” Nelson said. “Keep in mind this import story is now 1.1 billion pounds over last year’s import. And when you throw in the fact that exports for this year running about 200 million pounds under last year, this trade issue has kind of cautioned and eased and blunted a lot of the bullish argument here from lower production.”

Nelson emphasized that the cattle market has shifted away from the rapid rally witnessed from 2022 into early 2026. With additional border points opening for Mexican cattle imports and two consecutive months of slight consumer pushback on retail beef prices, attention turns to the bi-annual Cattle report in January to evaluate potential heifer retention and herd rebuilding.

On the pork side, production expanded by approximately 40 million pounds, while cash hogs and wholesale cuts have slipped 27% to 32% lower compared to the same period last year.

What to Watch Next

Looking ahead, Nelson expects December’s WASDE to remain quiet, focusing primarily on routine demand adjustments and South American row-crop progress. Market participants should mark January 12 on the calendar, when USDA releases its final annual production summary, winter wheat seedings, and quarterly Grain Stocks data covering September through November usage.

Contact Allendale

For more analysis, hedging strategies, or commodity market updates from Rich Nelson and the team at Allendale:

• Phone: 1-800-2-MARKET (1-800-262-7538)
• Website: allendalehub.com

You can also view the full reports here:

–– Crop Production:

— World Agricultural Supply and Demand Estimates (WASDE): 

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