USDA on Tuesday lowered its U.S. corn production estimate by 141 million bushels its October forecast. With harvested area left unchanged, the decline was entirely attributable to the 1.6 bushel drop in average yield to 179.6 bushels per acre. That pushes yield back below the 180-bushel threshold that was surpassed in October, continuing the trend this season that has seen corn yield estimates change direction from month to month.
We view changes to the harvested acreage estimate as unlikely based on preliminary data provided by the Farm Service Agency, leaving yield the main factor when it comes to estimating production over the remainder of the forecast season.
Corn yield has more room to fall
Our Pro Farmer estimate of 173.2 bushels per acre is unlikely to be matched by USDA come the January report, but our bias still lies towards corn yields moving lower in the agency’s final estimate. While there is historical basis for a big move in the January production report, the cut required to bring USDA’s figure down to our estimate would be unprecedented, though the top end of our range (174.0 bu. per acre) is still in reach.
Demand for corn, meanwhile, can still shift in multiple ways over the remainder of the marketing year. Export sales have performed poorly in recent weeks as soybeans have garnered much more buyer interest, which resulted in USDA cutting 25 million bushels from their own 2026-27 corn forecast this month. The U.S. dollar index has seen volatile trade in recent days, but remains just off the 18-month highs set in October — a factor that could make U.S. corn unattractive to foreign buyers. Still, corn has seen multiple flash sales to Mexico in recent weeks. The country is the top destination for U.S. corn exports, and it is often argued that when they begin to cover their domestic needs in a sizable way, a bottom may be close at hand.
Feed and Residual is likely to remain fluid and difficult to predict. The one relationship that still holds firm in the category is the percentage it makes up of total supply, reliably coming in at 32% to 34%. That means any changes to yield should also factor in a muted response in ending stocks given residual use is likely to shift along with it. We feel confident that ethanol use will remain mostly steady across the year as a whole, even though month-to-month changes in corn-for-ethanol yields have become more volatile recently.
Soybean yield lifted, matching Crop Tour estimate
USDA’s soybean production estimate is in line with our Pro Farmer Crop Tour estimate, with yields matching at 53.3 bu. per acre. Since the August yield estimate of 52.7 bu. per acre, USDA has been ratcheting up its yield estimate inch by inch. Since 2000, only six other years saw yield estimates increase in September, October and November. Half those years saw yields continue to climb in the January Annual Crop Production Summary Report, while the other half saw production slide from the November figure.
The average deviation from November to the final estimate is 0.4 bushel, so a big change to yield is not out of the picture yet. Our analysis of FSA acres indicates a big shift in acres is not likely for the 2026 crop year. USDA seems to agree, making no change to the harvested acreage figure in either October or November. That leaves yield as the main driver for any shift in supply going forward, aside from a 5-million-bushel swing in imports.
The demand side of the balance sheet remains far more fluid. USDA made minimal changes to demand, increasing seed use 3 million bushels, cutting residual use 1 million bushels and boosting exports 25 million bushels. The increase in seed use reflects anticipation for higher soy plantings in 2027 due to a more favorable price ratio (the agency cut the all farm price for corn a dime to $4.60 and lifted soybeans by the same amount to $12.10). The change in price received and continued concerns around high input costs for corn are likely to shift some acres to beans in the spring.
The change in residual use can be chalked up to “economics,” USDA using that category to get a round 300 million bushel ending stocks estimate. That leaves the change to exports. We have argued that the influx of Chinese buying over the past two months will ultimately require a higher export estimate. Assuming 25 MMT (~925 million bu.) of Chinese buying and the pace of buying for other importers, the allocation for countries other than China still looks too low. That is likely to further pressure the balance sheet, tightening ending stocks to below the 300-million-bushel mark, strengthening the floor under prices in the coming months.
Cotton crop cut as expected, exports slashed to match
Cotton saw a production cut of 267,000 bales, nearly identical to the 276,000 bale drop that analysts were expecting. That resulted in a fairly muted reaction in futures as traders had likely positioned ahead of the data release. While the drop in U.S. yield was of note — down 15 pounds to 775 pounds per acre — what USDA did not change on the supply side was also of interest.
Harvested acres in the U.S. remained unchanged at 8.164 million. That comes despite Hurricane Isaias making landfall in Florida on October 9, after data collection for the previous crop report had finished. While there’s no guarantee harvested acres will move come January, the agency will continue to receive administrative data from RMA and other sources that could see production change as a result of acres rather than yield alone.