Forecast for Tighter Ending Stocks Shifts Crop Price Projections Higher

USDA’s September World Agricultural Supply and Demand Estimates, or WASDE, helped shape a firmer crop price conversation heading into harvest. The data in this report can serve as checkpoint for borrower revenue projections, operating line needs and repayment capacity as harvest and 2027 planning come together.

Unlike August, when much of the attention was on yield and acreage adjustments, the September report was more about the overall national balance sheet: how much supply is available, how much can be absorbed by demand and where ending stocks may land. For both corn and soybeans, the ending stocks outlook tightened enough for USDA to raise its season-average price forecasts.

For corn, USDA lowered the national yield forecast by 2.2 bushels to 178.5 bushels per acre. This September yield correction is now closer to where some analysts expected yield to fall in August. Harvested acres were also reduced slightly, bringing expected production down to 15.8 billion bushels. USDA also lowered expected feed and residual use, but exports were left unchanged. With supply falling more than use, projected ending stocks declined and USDA raised the 2026-27 season-average corn price forecast by 30 cents to $4.80 per bushel.

Soybeans were a different story. USDA raised the national soybean yield forecast by 0.1 bushel to 52.8 bushels per acre and also increased expected harvested acres. That pushed soybean production modestly higher than the August forecast. However, USDA also raised expected soybean exports by 25 million bushels. Stronger demand more than absorbed the larger crop forecast, lowering projected ending stocks to 310 million bushels and increasing the season-average soybean price forecast by 60 cents to $12 per bushel.

That is the key takeaway from the September report: price support came from different places. Corn prices were supported by lower expected production. Soybean prices were supported by stronger demand. In both cases, the common thread was tighter ending stocks.

The national view extends beyond corn and soybeans. USDA left aggregate U.S. wheat supply and use categories unchanged but raised the 2026-27 season-average farm price forecast by 20 cents to $6.40 per bushel. For cotton, USDA lowered expected U.S. production, yield and ending stocks while raising the projected upland cotton season-average farm price to 78 cents per pound. For lenders, these updates matter because borrower risk will vary by region, crop mix and marketing window.

Livestock and dairy add a different margin angle. USDA lowered the 2026 red meat and poultry production forecast, mostly on lower beef and pork production. Cattle and hog price forecasts were also lowered for the remainder of 2026. At the same time, the milk production forecast increased, and the 2026 all-milk price forecast was raised slightly to $19.90 per cwt. For livestock-heavy portfolios, stronger grain and oilseed prices can increase feed-cost pressure at the same time price outlooks are less supportive for some livestock segments.

Higher crop prices help, but livestock is softening and input costs rose too

For lenders, the report generally improved the revenue side of crop borrower conversations, but it does not replace the breakeven conversation. Higher crop futures prices are helpful, especially compared with where markets were earlier in the year. But profitability still depends on borrower-specific math: yield, basis, crop versus livestock mix, crop insurance position, input costs, storage costs, interest expense and marketing decisions.

That matters as harvest and 2027 planning come together. The last two years have brought plenty of variables outside a farm’s control, including major weather events, tariffs, trade uncertainty, higher energy costs, fertilizer price movement and interest-rate pressure. Diesel prices, in particular, rose sharply this summer. Farm borrowers cannot control the broader economic forces pushing input costs higher. They can control how well they understand their own cost structure. For lenders, updated breakevens, marketing plans and cash flow sensitivity analysis can help clarify how much financial flexibility borrowers have heading into renewal season.

A $4.80 season-average corn price forecast and a $12 soybean price forecast sound more supportive than earlier outlooks, but those numbers mean different things across different operations. A borrower with strong yields, disciplined costs and favorable basis may see a very different margin picture than a borrower with lower yields, higher cash rent, weaker basis, higher borrowing costs or more exposure to fertilizer and fuel price increases. Livestock borrowers are also facing a changing cycle as feed-cost forecasts rise.

Interest rates remain part of that calculation. The Federal Open Market Committee's September decision to increase the fed funds rate by 25 basis points adds another layer to the rate outlook, particularly for borrowers relying on operating credit or planning major equipment, land or working capital decisions. Inflation was the key driver of September’s fed funds rate hike. Producer prices increased 0.4% in August and 5.4% year over year. More than three-fourths of the monthly increase in final-demand goods prices came from energy. Diesel fuel prices for producers jumped 24.1% in August.

Consumer inflation also remained well above the Federal Reserve’s 2% goal. The Personal Consumption Expenditures price index, the Fed’s preferred inflation measure, was 3.7% in July, and August data will not be released until Sept. 30. The Consumer Price Index was 3.4% in August.

All of this adds up to a more complicated credit equation. Prices are higher, but markets still have to work through harvest, demand and global trade questions. Local basis, regional yields and individual borrower cost structures add another wrinkle. For lenders, the improved crop price environment is an opportunity to revisit breakevens, assess marketing opportunities, stress-test repayment capacity and discuss ways borrowers can protect margins where possible.

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.