Overview: Bearish Data Dominates January Reports
On Monday, January 12, USDA released a group of the most impactful reports for agricultural markets produced all year. These reports capped a week in which the futures markets rallied early in the week and then paused as participants positioned themselves for the USDA data.
The reports left a bit to be desired from a producer perspective. Large stocks and bigger supplies both domestically and internationally created a bearish scenario across agricultural commodity markets. This newsletter reviews the major takeaways and implications from those reports.
Wheat Market Outlook
The USDA reports had a slightly bearish tinge to them in the wheat markets. Prices moved lower across all major wheat futures contracts after the release of the data. While the reports were negative, wheat prices should be able to work through the information contained in the reports without a major selloff given current weather conditions in U.S. hard red winter wheat areas and in other parts of the northern hemisphere. The extremely bearish nature of the corn markets makes any extended rally in agricultural markets unlikely over the near term.
Domestic Balance Sheet On the domestic balance sheet, the WASDE report lowered domestic use of wheat on lower feed and residual totals through the second quarter of the marketing year. December 1 ending stocks came in at 1.68 billion bushels, above market expectations of 1.64 billion. These larger stocks weakened feed and residual usage by twenty million bushels to one hundred million bushels.
Back revisions of grains stock reports raised beginning stocks slightly for the 2025-26 marketing year and increased supply by four million bushels. Exports remained at nine hundred million bushels and export data confirms the export forecast remains on pace. Ending stocks increased twenty-five million bushels to 926 million bushels in contrast to market expectations. The overall impact from the balance sheet changes is the potential for continued price weakness as information on the 2026 crop materializes. The initial data offering from the USDA on the new crop is not helping prices.
Seedings Report USDA released the winter wheat seedings report on Monday. Analysts expected winter wheat acreage at 32.4 million acres with hard red winter wheat predicted at twenty-three million acres. Acreage for the 2026 crop sits at thirty-three million acres, down 153 thousand acres from 2025. Hard red winter wheat acreage barely moved at 23.5 million acres.
Oklahoma acreage increased sixteen percent over last year to 4.8 million acres. In fact, Oklahoma is credited with the largest acreage increase for the 2026 hard red winter wheat crop. Soft red winter wheat acreage increased slightly to 6.14 million acres. White wheat acreage dropped to 3.36 million acres.
Global Production The WASDE report 2025/26 world wheat production came in at 30.94 billion bushels. Larger projected crops in Argentina and Russia led to the production increase of 160 million bushels from the December forecast. As expected, Argentinian wheat production came in at 1.01 billion bushels. The Russia crop totaled 3.3 billion bushels, up an additional seventy-three million bushels, as the crop continues to get larger. Turkey production was lowered thirty-six million bushels along with minor adjustments across small importers.
Wheat production is up 1.5 billion bushels over the 2024-25 marketing year. Production in major importers is down 168 million bushels year over year, and demand is strong given lower prices globally. Ending stocks outside of China are forecast at 5.64 billion bushels, an increase of 125 million bushels from the last report. The world stocks to use ratio excluding China for 2025/26 is forecast at 22.8 percent, up 1.5 percent from the 2024/25 marketing year estimate.
Price Action KC hard red winter wheat prices fell yesterday to close at $5.26 in the March futures contract with basis in most areas of Oklahoma remaining stable. July futures prices closed at $5.51, down five cents. KC hard red winter wheat futures, despite the bearish information, did not fall below the recent range the prices have been moving within.
Soybean Market Outlook
Soybean futures prices dropped across the forward curve yesterday on the USDA data release. The March soybean contract fell thirteen cents but closed and the November contract closed at $10.67, down five cents. Larger domestic and global ending stocks place added emphasis on domestic demand for soybeans over the next year. Soybean prices will continue to face difficulties rallying until there is more certainty on biofuels and trade policy that affirm a more bullish scenario for demand.
Supply and Demand USDA kept soybean yield at 53 bushels per acre for the 2025 crop. Supply increased on slightly higher harvested acreage of 80.4 million and a minor increase of beginning stocks. Supply of 4.607 billion bushels was a 17-million-bushel increase. USDA finally lowered soybean exports by sixty million bushels and raised crush by fifteen million. Exports being lowered to 1.575 billion bushels reflected the weaker pace despite recent Chinese purchases and the expectation of intense competition out of South America.
The larger crush forecast reflects the strong start to the marketing year for soybean processing. During the first quarter of the marketing year, soybean crushing came in at 662 million bushels, up approximately forty million bushels from last marketing year. Ending stocks were up 60 to 350 million bushels.
Despite raising soybean crush, USDA lowered soybean oil production on a lower extraction rate in processing. Soybean oil use for biofuels is forecast to fall seven hundred million pounds to 14.8 billion pounds. Increased exports and food usage offset the drop in biofuels usage. Soybean meal production is up with a projected increase in exports and domestic usage. Lower prices for meal are expected to drive a strong demand in 2026.
Yields and Global Outlook USDA’s soybean yield came slightly above industry expectations for the January report. NASS reported record yields for the upper Midwest, Kansas, Nebraska, and parts of the Mid-South. Oklahoma’s 33 bushels per acre predicted in November ended up being twenty-nine bushels per acre.
Global soybean production for 2025/26 was forecast 115 million bushels higher at 15.6 billion bushels. Despite minor adjustments lower to soybean crops in major importers, the forecast of an even larger Brazilian crop at 6.54 billion bushels pushed ending stocks up to 4.57 billion bushels. Expectations of large crops in South America are solidifying and making competition fierce in the export market.
Corn and Sorghum Outlook
Corn markets absorbed the most bearish portion of the data dump on Monday. March corn futures fell twenty-four cents after the report to $4.21 per bushel. December corn futures fell to $4.51 on Monday. Corn in Oklahoma was priced on average around $3.93 per bushel. It appears likely that corn markets hold a bearish tone for the near future and hang over other crop markets.
Corn Balance Sheet The corn balance sheet saw a variety of changes. USDA’s corn yield forecast of 186.5 million bushels easily leads the pack as the most shocking. Most analysts were expecting a yield closer to 184 and the 0.5 bushel per acre yield increase was extremely bearish. Record corn yields reported through the western Corn Belt and upper Midwest along with strong yields throughout the country generated this record national yield. The record yield combined with an increase of harvested acres to 91.3 to push production above seventeen billion bushels. Total supply came in at 18.6 billion bushels due to slightly higher beginning stocks associated with ending stocks revisions in previous quarters.
Corn stocks totaled 13.3 billion bushels on December 1 which placed disappearance at a whopping 5.29 billion bushels through the first quarter of the marketing year. As such, USDA raised feed and residual by one hundred million bushels to 6.2 billion bushels. Whether this demand materializes for feed and residual is very much in question. 2025/26 demand went up by ninety million bushels to 16.37 billion bushels. No changes were made to ethanol or export usage. Corn exports remain on pace and the development of the second corn crop in Brazil looks to be quite important at the end of the marketing year. Corn usage for ethanol needs to tick up a bit to hit the current forecast. A ten million bushel drop in food, seed, and industrial offset the move in feed and residual.
Corn global ending stocks increased to 11.45 billion bushels. While up over last month, ending stocks are forecast lower from 2024-25 levels. The increase is due to U.S. and China corn production increasing by 268 and 245 million bushels, respectively. The production increases moved into ending stocks.
Sorghum Outlook Sorghum production was forecast at 437 million bushels, up nine million from December. Harvested acreage at six million acres, up 300,000, was offset by a 2.4 bushel drop in yield to 72.6 bushel per acre. Oklahoma’s yield is estimated at 58 bushels per acre, down two bushels from the previous forecast. The production was not that bearish given the recent demand potential.
USDA forecast ending stocks at forty-two million bushels, down one million from last month. Food, seed, and industrial use was upped five million bushels to 105 million on ethanol grind. Feed and residual were raised a similar amount to 105 million bushels on first quarter disappearance. Exports are still being forecast at 225 million bushels. China began to buy sorghum and total commitments through January 1 sat at ninety million bushels. The arrival of China saw commitments increase by approximately forty-five million bushels in December and offer the potential to hit USDA’s forecast. Net sales of approximately four million bushels a week are necessary to reach 225 million bushels. Weakness in corn prices continues to impact Oklahoma sorghum prices as basis remains weak.
