Grain markets saw significant movement on May 12 as both classes of winter wheat ended limit up following the United States Department of Agriculture’s (USDA) sharp reduction in its May World Agricultural Supply and Demand Estimates report, according to Arlan Suderman, chief commodities economist at StoneX.
The USDA lowered wheat yield by 5.8 bushels per acre to 47.5 bushels and cut total wheat production to 1.561 billion bushels, marking a decrease of 424 million bushels from last year and the smallest crop since 1972. Total winter wheat production was estimated at 1.048 billion bushels, down by 25% from the previous year due in part to a substantial reduction in hard red winter wheat output.
Suderman said further reductions could be possible: “I think we’ve seen quite a bit of deterioration here over the last couple of weeks. These are May 1 numbers, so we may see a little bit lower number. Industry tour this week should give us a bigger idea on that.” He added that when USDA makes large adjustments early on, it may signal more changes ahead: “Because they tend to be fairly conservative and don’t want to overshoot. They don’t like correcting back the other way.”
Abandonment rates for winter wheat acres were highlighted as key factors affecting final numbers. Suderman said high diesel prices could increase abandonment: “Now, the USDA’s abandonment number is pretty close to what we modeled, but how might high diesel prices affect that? Because as diesel prices increase…we may push that abandonment a little bit higher.” He estimated Kansas’ rate at about 17%, with potentially higher rates in Texas, Oklahoma, and Colorado.
Wheat price volatility was also discussed: “Well, the interesting thing about wheat is it doesn’t necessarily trade supply and demand fundamentals so much as it trades headlines and emotions,” Suderman said. He referenced past market swings tied more closely to news events than fundamentals.
Global stocks for both corn and soybeans are also under pressure due to lower yields and increased biofuel demand worldwide. The USDA estimates global corn carryout for marketing year 2026-27 at 277.5 million metric tons—down nearly twenty million from last season—with new crop U.S. ending stocks falling below two billion bushels despite an uptick in Brazilian and Argentine production figures.
Suderman addressed soybean trends as well: “The question is going to be exports…China only buys about twelve million metric tons…As high prices our beans are relative to Brazil beans…they don’t have room in their reserve for it.”
In livestock markets, cattle futures have faced downward pressure amid concerns over increased beef imports after President Trump reconsidered eliminating tariff rate quotas on beef imports from Brazil: “A little over a twenty-six percent tariff that Brazil has to pay on what it exports…If you wipe that out…would be expected to significantly increase exports,” Suderman said.
Efforts against anti-competitive practices have also been announced through Department of Justice investigations into major meat packers; however tight domestic supplies continue supporting consumer spending levels according to Suderman.
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