USDA Trims Yield Forecasts but Finds More Acres in August WASDE
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The August World Agricultural Supply and Demand Estimates, or WASDE, can be a market mover. The August WASDE includes the first major yield estimate updates for new-crop corn and soybeans, incorporating information from producer-driven survey responses as well as crop condition information, satellite imagery and more.
This year’s August agricultural yield survey included a new focused methodology as the National Agricultural Statistics Service, NASS, embarks on a data modernization initiative. August’s WASDE lowered expected yields for both corn and soybeans but increased expected harvested acres from July. Nonetheless, markets reacted favorably, seeing the report as bullish and pushing futures prices higher.
Yield forecast trimmed—but not by much
For corn, USDA lowered the 2026-27 corn yield forecast from 183.0 to 180.7 bushels per acre. However, the cut was partly offset by a 1.2 million acre increase in estimated harvested acres, leaving production slightly higher than July at 16.0 billion bushels.
Even with the yield cut, USDA is still forecasting a very large U.S. corn crop—the second highest on record if realized. This is larger production than expected back in July, when lack of rain and adverse weather caused some analysts to predict yields could fall into the high 170s in the August report. That didn’t happen.
Even with the additional acres reported in August, stronger export expectations helped tighten U.S. ending stocks, which are now expected at 1.65 billion bushels. U.S. exports are expected to get a lift from higher global demand and reduced exports from other corn exporters. Ukraine’s export outlook was reduced because of conflict-related logistics disruptions, while the EU’s corn outlook was reduced because of heat and dryness. USDA raised the expected season-average U.S. farm price by 10 cents to $4.50 per bushel.
Soybeans told a similar, but slightly less dramatic, story. USDA lowered the national soybean yield forecast from 53.0 to 52.7 bushels per acre, but estimated harvested acres increased by a sizeable 1.4 million. The result was a larger production forecast, now projected at about 4.52 billion bushels.
Stronger crush demand helped absorb part of the increase, but new-crop ending stocks still moved higher to 320 million bushels. USDA left the 2026-27 season-average soybean price unchanged at $11.40 per bushel, but market prices generally increased post-report as traders interpreted the information as bullish.
August weather often makes the crop
The August WASDE did not end the yield or weather conversation. Parts of the eastern Corn Belt have dealt with excessive rain and extreme weather, while areas farther west have faced drought and heat. In Compeer’s Upper Midwest territory, the key question is whether generally strong early-season conditions can carry through grain fill and into harvest.
August is particularly important for pod fill and soybean yield. For now, the August WASDE is giving both corn and soybean markets some upward momentum while we wait and see what really happens with final yields and production.
The August WASDE price reaction is helpful, but it does not significantly ease margin pressure or change the cost side of the equation. Energy markets remain a key risk for diesel, fertilizer and transportation costs this harvest season.
The U.S. Energy Information Administration’s (EIA) August outlook pointed to continued challenges in the Strait of Hormuz. EIA projects Brent crude oil prices to average about $85 per barrel in the third quarter of 2026, keeping energy costs elevated compared with earlier expectations. Escalation between Russia and Ukraine, including trade disruptions in the Black Sea region, also remains important for grain, energy and fertilizer markets.
For producers, the practical question is whether any improvement in crop prices is enough to offset potentially higher operating and borrowing costs heading into harvest and 2027 planning.
Macroeconomics: from legislative policy to the interest rate outlook
The other major factor for producers is interest rates. June Personal Consumption Expenditures, or PCE, inflation cooled to 3.7% from a year earlier, down from May, while core PCE, which excludes food and energy prices, was up 3.3% from a year earlier. That is improvement, but still well above the Federal Reserve’s 2% goal. The personal saving rate also fell to 2.7% in June, suggesting consumers are absorbing higher prices partly by saving less.
At its July meeting, the Federal Reserve held the federal funds target range at 3.50% to 3.75%. Notably, three Federal Open Market Committee, or FOMC, members dissented because they preferred a quarter-point rate increase. This dissent underscores that the rate discussion has shifted away from near-term cuts and toward whether inflation requires a longer pause, or even more tightening. It appears we are in a higher-for-longer rate environment until higher costs, driven in part by shocks to the energy market, slow down.
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Since the FOMC meeting, some data have been supportive of slower inflation and signs of labor market weakness, both of which could support a more patient interest rate outlook. Consumer Price Index, or CPI, data showed July inflation was not nearly as high as it was in spring. July CPI inflation rose 0.1% on a seasonally adjusted basis after falling 0.4% in June. Year over year, July CPI inflation was 3.4% and, when excluding food and energy prices, core CPI was 2.5%. Furthermore, job growth was weaker than expected at –23,000 jobs in July, while the unemployment rate changed little at 4.1%. But, longer-term Treasury yields have moved higher recently, resulting in an unsettled rate outlook. For producers, that means softer inflation and labor data may support a Fed rate pause, but longer-term borrowing costs could remain stubbornly elevated.
Lastly, policy uncertainty remains a part of the summer outlook. Farm bill discussions advanced in the Senate, but the bill did not make it out of committee before the August congressional recess. E15 also didn’t make it to the Senate floor before summer break.
Add in the uncertainty of energy and fertilizer markets, and there is a lot to digest as we head into the harvest season. Final yields, harvest prices, export demand, energy costs, fertilizer prices and interest rates will all shape producer cash flow heading into fall.
Stay informed with more timely insights from Compeer's AgEdge podcast and AgriMindset series. While crop margins remain tight, cropland prices remain generally durable. That’s the takeaway from our latest AgriMindset webinar, where Jade Kruschke, Compeer Appraisal Regional Manager, breaks down the latest real estate and land price trends using Compeer’s benchmark appraisal data.
The information provided is accurate to the best of the author’s knowledge at time of publishing. It is presented “as is” with no guarantee of completeness, accuracy or timeliness, and without warranty. The information is educational in nature and not investment, legal, accounting, tax or other advice of any kind.
