The May World Agricultural Supply and Demand Estimates (WASDE) Report from the United States Department of Agriculture (USDA) is always one of the most anticipated. The May WASDE gives the first look at new season production and consumption estimates, and this year it moved the market.
After record wheat production and rising stocks in 2025-26, wheat production is forecast to fall in 2026-27. With global wheat production pegged at 819mmt it will still be the second highest production year on record, but the 3% decline on the previous year was larger than expected.
Figure 1 shows forecast consumption remaining stable, which will match production in 2026-27. Wheat ending stocks are expected to decline marginally, pulling the stocks to use ratio back to 33.6%. Wheat stocks are still comfortable, but delving a little deeper into the data tells us why prices rallied sharply last week.
Some major exporters, namely, Australia, the US, Argentina and the EU are all seeing significant cuts in production in the coming year. The US is forecast to have wheat production decline 22% on last year, which took the market by surprise. Australian production was pegged at 30mmt, down from 36mmt last year.
The trading session after the release of the WASDE saw prices rally sharply in the US futures market. The decline in US production was the major driver, as dry weather across major winter wheat growing regions bit into yields.
World corn production is also expected to fall, but only by 1.4%, and despite a more significant 6.7% decline in ending stocks, and a historically weak stocks to use ratio (figure 2) the corn market remained relatively steady.
The market was seemingly expecting the 6% decline in US corn production, coming off a very strong 2025-26. Corn prices have been tracking sideways between 440¢ and 480¢/bu for much of the last year. Rising demand is being met with stronger production, and the market remains comfortable with the state of supply versus demand.
What does this mean?.
Wheat given back much of the gains it picked up post WASDE. Improving weather in the US, and the continued supply of cheaper Black Sea wheat saw sellers emerge on the futures exchange. With both wheat and corn, stocks remain comfortable, but lower levels will mean more volatility on weather or geopolitical issues.
What does it mean?
Wheat has given back much of the gains it picked up post WASDE. Improving weather in the US, and the continued supply of cheaper Black Sea wheat saw sellers emerge on the futures exchange. With both wheat and corn, stocks remain comfortable, but lower levels will mean more volatility on weather or geopolitical issues.
Key Points
- The WASDE released last week surprised the wheat market with lower production.
- Corn production was also lower, but it was largely expected.
- Lower stocks will likely see more volatility in markets going forward.
Click on figure to expand
Click on figure to expand
Data sources: USDA, CME, Mecardo
