USDA caught a lot of criticism early in the marketing year for a Feed & Residual (F&R) figure many analysts termed unbelievably large. But that category has remained defiantly robust. In fact, a surprisingly large drawdown in supply in the June 30 Grain Stocks Report led USDA to increase its annual F&R estimate in last week’s WASDE to a record 6.35 billion bushels.
What led the trade seemingly astray? One would understandably expect F&R use to track with the cattle herd, and conventional wisdom says the smallest cattle herd in decades would lead to lower F&R use. Historically, however, that assumption has not held true. As Pro Farmer pointed out in January, F&R use tracks with a percentage of total supply rather well. As more bushels are produced, more are used and more are “lost.” Ample supplies also tend to correlate with low prices, which has largely been the case over the past year as well. Low prices tend to have end-users using a shovel rather than a spoon when measuring corn use. That’s why we went against the tide and pointed out USDA was justified in its estimate back in January, and pointed out USDA could have increased its F&R estimate, which has come to pass.
The 2025-26 figure is in line with the past couple of years. Moreover, quarterly F&R use as a proportion of total supply is within what is normal for each of the three quarters of the marketing year thus far.
The latest bump in F&R use has some analysts wondering if USDA is factoring in a cut to its 2025 production estimate as well. USDA lifted production beyond estimates in the Annual Production Summary in January. Given anecdotal reports of lower yields in 2025 than 2024 in top production states, analysts have questioned whether the figure is too high.
Following the Annual Production Summary in January, USDA doesn’t make adjustments to old until the September Grain Stocks Report. The agency began using that report as an opportunity to adjust old-crop production in 2020 (for the 2019 crop). Each year since has seen an adjustment to production figures, with four of the six years seeing a downward revision in its production estimate. USDA did not adjust production before that mark as use is harder to track in corn than other crops, like soybeans, which saw adjustments to production beginning in 2010.
| Production adjustment | |
| vs. Annual Production Summary | |
| Crop Year | (million bushels) |
| 2019 | 3 |
| 2020 | -71 |
| 2021 | -41.4 |
| 2022 | -15.043 |
| 2023 | -1.075 |
| 2024 | 25.012 |
Does USDA use F&R as a placeholder for a production cut? If that were the case, one would expect the four years that saw production cuts in September to see F&R use lowered at the same time, but that has not always been the case. In three of the four years that saw a cut to production, USDA actually raised its F&R estimate at the same time.
Given current F&R use is within the normal range given 18.597 billion bushels of total supplies, it is difficult to surmise to what degree USDA could adjust production in September. Given late season disease pressure and record test weights noted in the January production report, there is some room for a downward revision, but it may not be as big as what some assume.