The new season United States Department of Agriculture (USDA) World Agricultural Supply and Demand Estimates (WASDE) report has dropped overnight. The May report is the most anticipated as it gives a first look at the 2025-26 production and consumption, which can obviously move markets.
The headline numbers from the WASDE are for record production levels for both wheat and corn. However, with an ever-increasing population and demand for stock feed, consumption for both wheat and corn is expected to outweigh production, leading to a small reduction in stocks.
Wheat production for 2025-26 is forecast to increase 1% to 808 mmt (Figure 1). The USDA is forecasting increases from Russia, China, and Canada, amongst others, with the US, Australia, and Kazakhstan to see falls.
The production forecast for Australia is at 31 mmt, down from 34 mmt last year. There is little commentary on why Australia is down, but no doubt, the lack of moisture in some key southern cropping zones would be contributing.
World wheat consumption is forecast to increase to 808 mmt, which matches production. In 2024-25, ending stocks have shrunk to 265 mmt and are expected to remain steady in 2025-26. A key measure of supply versus demand is the stocks-to-use ratio. With similar stocks and increased consumption, the stocks-to-use ratio for wheat is forecast to fall marginally to 32.9%, the lowest level since 2012-13.
The supply and demand equation is moving a bit more in the corn space. Figure 2 shows that the USDA is forecasting a 3.6% increase in production, again to record levels. However, this is to be more than matched by a 2% increase in consumption, which is set to outstrip production by 9.5 mmt.
A fall in corn stocks, along with increased consumption, will push stocks to use down to a 13-year low of 21.8%. The increased consumption in China is largely responsible for the rising world use numbers and lower stocks.
The final numbers released in the WASDE were close to what the market was expecting. There was a downward pressure on wheat and corn overnight, with spot wheat breaking through key support levels of 500¢/bu.
What does it mean?
Larger production leads to lower prices, which leads to higher consumption. The strong supplies are depressing prices to an extent, yet stocks aren’t expected to build. There is still time for supply shocks in wheat, and even longer for corn, but markets are comfortable that strong global production will keep a lid on prices.
Key Points
- The USDA is forecasting record production for wheat and corn in 2025-26.
- Increased consumption is expected to match production, with stocks steady or lower.
- Markets felt a little pressure thanks to stronger production.
Click on figure to expand
Click on figure to expand
Data sources: USDA, CME, Mecardo
