Corn futures plunged Monday, after USDA unexpectedly boosted harvested acres and yield, pushing U.S. production above the 17 billion bushel mark and likely setting a negative tone across the grain and oilseed markets for early 2026.
What happened?
Analysts had almost unanimously looked for USDA to lower its corn yield estimate from 186 bushels an acre in November, with a Reuters survey pegging the average at 184 bushels. Instead, USDA raised its average yield to 186.5 bushels, raised its harvested acreage estimate by 1.211 million acres to 91.258 million acres, lifting total production to 17.021 billion bushels from a November estimate of 16.752 billion bushels. Ending stocks rose to 2.227 billion bu., up from 2.029 billion bushels in the previous estimate.
Harvested acres have risen nearly 4.5 million acres since USDA’s July report, which along with yields helped make for the production shocker.
PF Report Reaction: Corn and soybean production higher than expected
March soybeans fell 13 ½ cents to $10.49, its lowest close since Jan. 2 after USDA left its average yield estimate at 53 bushels an acre, but edged up acres to lift production to 4.262 billion bushels and lifting ending stocks to 350 million bushels from a December estimate of 290 million.
Meanwhile, Monday’s reaction was a textbook example of the danger left by traders all moving to the same side of the boat. March corn ended 24 ¼ cents lower at 4.21 ½, a loss of 5.4% on the day to end at its lowest since August. Bears will be eying the contract low at $4.10 and a test of sub-$4 territory can’t be ruled out.
While minor compared to corn and soybeans, wheat also received bearish updates in the report resulting in a 6 cent decline in Chicago wheat to $5.11 ¼, and a 3 ½ cent decline in Kansas City wheat to $5.26 ¾. With no new production data, changes to the balance sheet were driven entirely by a 4 million bushel increase in beginning stocks and decreases to the demand side. The biggest cut to demand was a 20 million bushel decrease in the feed and residual number, but an export estimate steady with last month at 900 million bushels also didn’t help as expectations leaned towards the agency increasing the category. One of the few bright spots for the commodity is that it has already been trading near the bottom of its established range, and would need even further shocks to break the long-term support at the $5.00 mark.
Cotton was the only major row crop that didn’t experience a fully price bearish reaction to the report. Production was cut 350,000 bales nationally, with pullbacks concentrated in the Delta.This was a larger cut than analysts expected, resulting in nearby cotton closing 50 points higher on the day for a close at 64.91 cents.
Moving forward
USDA has certainly provided a series of surprises over the course of the past year, making it difficult for those in the industry to remain focused amid muddled sentiments after a late-planting season affected the eastern Corn Belt and excess rains turned many areas with strong production prospects into a disease-riddled crop. And while most producers wouldn’t argue that the 2025 crop was something of a record, big acres and big yields are historically atypical.
Nonetheless, the hand has been dealt and market participants must live with the data as 2026 production efforts inch closer. Now is the time to take a deep dive into on-farm economics, to gain an insight into areas where inefficiencies exist.
Focus on shoring up working capital and liquidity, bearing in mind that back-to-back years of large corn acres could exacerbate the current landscape if input prices remain elevated. This is an opportunity for renegotiation or to release areas that no longer serve your operation.
Lean on basis levels with corn demand at unprecedented levels. Monitor basis at export terminals and processors. A decline in futures is likely to result in a corresponding decline in grain movement, which could entice buyers to offer premiums for volume.
While today’s report was a shocker, soon it will be old news. Focus on the future and how to best serve your operation.