Projections Point to Larger Inventories of Corn, Soybeans, and Wheat in the US

The latest outlook for US corn, soybeans, and wheat in 2024 suggests an expectation of larger supplies, albeit partially offset by increased domestic usage and strong global demand. This preliminary forecast, disclosed during the US Department of Agriculture's 100th annual Agricultural Outlook Forum by the Interagency Commodity Estimates Committee, sheds light on the prevailing macroeconomic factors influencing the markets in 2024.

Global economic growth is projected to persist throughout the year, with many regions expected to experience accelerated expansion compared to 2023. This robust economic activity is anticipated to fuel heightened global demand for wheat, corn, and soybeans. Additionally, inflation rates are forecasted to continue moderating from their peak of 8% in 2022 to 3% in 2024 and further to 2% in 2025. Meanwhile, the US dollar, while no longer at its 2022 highs, remains relatively strong, posing potential challenges for crop exports.

The surge in crop input costs, particularly fertilizer prices, witnessed during the lead-up to Russia's initial invasion of Ukraine and the subsequent 18 months, has now tapered down to pre-war levels. However, this decline in input costs has coincided with diminished forward pricing opportunities for many agricultural commodities.

USDA forecasts for 2024-25 anticipate an increase in carryover stocks of wheat, corn, and soybeans for the world excluding China, totaling 7% higher than in the previous year. Notably, global stocks of corn and soybeans are expected to experience substantial growth, with corn stocks projected to rise by 17% following the record US corn crop in 2023-24 and soybean stocks anticipated to increase by 15% due to a recovery in Argentina's production. However, global wheat carryover stocks are forecasted to decrease for the fourth consecutive year, despite a 15% projected increase in US wheat carryover.

The decline in wheat acres is attributed to a reduction in winter wheat planted area, down 6% from 2023, with only Montana showing an increase among the top five production states. Soybean acres are expected to rise by 5% to 87.5 million acres due to increased demand for soybean oil, biofuel, and expanding crush capacities. Comparatively, corn acres are projected to decrease by 4% to 291 million acres.

Corn supplies for 2024-25 are forecasted to reach a record 17.2 billion bushels, with lower production offset by significantly higher beginning stocks. Production is based on 83.1 million harvested acres, with a trend yield of 181 bushels per acre and normal planting and summer crop development. Increased driving and gasoline consumption are expected to marginally boost ethanol use by 25 million bushels.

US soybean production for 2024-25 is projected to reach a record 4.5 billion bushels, reflecting an 8% increase from the current crop year, supported by an expanded yield projection of 52 bushels per acre. Expectations of increased supply support continued growth in soybean crush, a recovery in export volume, and an increased carryout after the crop year.

Total domestic wheat supplies are forecasted to reach nearly 2.7 billion bushels, up 6% from 2023-24, driven by higher production and carry-in levels. Despite a smaller planted area, improved moisture conditions in key wheat-growing regions are expected to bolster production, resulting in a 5% increase compared to the previous year. Domestic food use of wheat is projected to remain stable, while exports could see a 7% rise to 775 million bushels. Nonetheless, exports are anticipated to remain historically low, leading to an increase in carryover stocks by June 1, 2025.