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Recap of the May WASDE for U.S. Grains

The May 2025 World Agricultural Supply and Demand Estimates (WASDE) is a highly anticipated report as it offers the first official USDA estimates of the new crop marketing year (USDA, 2025). For 2025/2026, the estimates show a divergence of fundamental factors in the U.S. grain markets. Estimated days of use on hand at the end of the marketing year (a stocks-to-use ratio calculated by dividing ending stocks by average daily use) are projected to increase in 2025/2026 compared to 2024/2025 for corn, wheat, and rice. Conjointly, the season average farm price is projected lower for these three grains. For soybeans, days of use on hand are forecast to decrease and the farm price is forecast to increase compared to last year.

Based on the Prospective Plantings report back in March, corn acres for 2025 are projected at 95.3 million, up from 90.6 million in 2024. USDA’s yield estimate for 2025 is a record high 181.0 bushels per acre. This combines for a record corn crop of 15.820 billion bushels. Add in 1.415 billion bushels of beginning stocks and the corn supply in the 2025/2026 marketing year is a record 17.206 billion bushels, up 3.6% from last year.

U.S. corn use is projected at record levels as well with increases in feed and exports. However, the increase in corn supply exceeds the increase in use, resulting in an increase in ending stocks. Days on hand increased by an 8.6-day supply, and the season average farm price is down from $4.35/bu last year to $4.20/bu. With a PLC reference price in 2025 of $4.26/bu, that would earn a 6-cent-per-bushel payment.

Soybean acres for 2025 are estimated at 83.5 million, down from 87.1 million in 2024. But with a record forecast yield of 52.5 bushels per acre, production in 2025 is down only 26 million bushels from 2024. Soybean use is forecast to increase by 31 million bushels on increased domestic crushings. Ending stocks are expected to decrease by 55 million bushels, and days of use on hand are expected to decline by 4.8 days. The season average farm price is projected to increase by 30 cents per bushel to $10.25.

U.S. wheat production is estimated to be little changed from the 2024 crop with the decrease in acres mostly offset by a higher yield estimate. Impacting the wheat supply for 2025/2026 is an increase in beginning stocks and a decrease in projected imports (-30 million bushels). Wheat use is projected lower on a decrease in exports of 20 million bushels. This raises the wheat ending stock estimate by 82 million bushels, increases carryover to a 172-day supply, and lowers the season average farm price from $5.50/bu last year to $5.30/bu. With a $5.56/bu reference price, this would generate a PLC payment of 26 cents per bushel.

The U.S. rice supply in 2025/2026 is projected higher, as an increase in beginning stocks offsets a small decline in production. Use is up 1 million hundredweight with an increase in domestic use and a decrease in exports. This leaves ending stocks up 3.5 million hundredweight and days on hand higher by 3.2. The farm price is down $2 per hundredweight to $13.20, below the PLC reference price of $14.00.

Of course, much can change between these early season estimates and final crop production and use numbers. Weather, trade policies, the economy, global grain fundamentals, and other factors foreseen and unforeseen, will evolve and emerge to shape grain prices. The May WASDE is an important benchmark to assess and estimate the impact of these changes and forces as the season unfolds.

Table 1. May 2025 WASDE Numbers for U.S. Grains (corn, soybeans, and wheat in millions of bushels; rice million hundredweight) and 2025 PLC Reference Prices and Estimated Payment Rate.

Crop	Corn			Soybeans			Wheat			Rice
	mil bu	change*		mil bu	change*		mil bu	change*		mil cwt	change*
Beginning Stocks	1,415		-348	350		+8	841		+145	45.0	+5.2
Production	15,820**		+953	4,340		-26	1,921		-50	219.3	-2.8
Total Supply	17,260**		+605	4,710		-24	2,882		+64	313.5**	+3.5
Total Use	15,460**		+220	4,415		+31	1,959		-18	266.0**	+1.0
Ending Stocks	1,800		+385	295		-55	923		+82	47.5	+2.5
Days on Hand	42.5		+8.6	24.4		-4.8	172.0		+16.7	65.2	+3.2
Price $/bu or $/cwt
Farm Price	$4.20		-$0.15	$10.25		$0.30	$5.30		-$0.20	$13.20	-$2.00
PLC Reference Price	$4.26			$9.26			$5.56			$14.00
PLC payment rate	$0.06			$0.00			$0.26			$0.80

*change 2025/26 marketing year compared 2024/25 marketing year.

**record high

Reference

USDA, Office of the Chief Economist. World Agricultural Supply and Demand Estimates, May 12, 2025. Available online at https://www.usda.gov/about-usda/general-information/staff-offices/office-chief-economist/commodity-markets/wasde-report.

Welch, J. Mark. “Recap of the May WASDE for U.S. Grains.” Southern Ag Today 5(20.3). May 14, 2025. Permalink

May 14, 2025

Screwworms, Part II

The U.S. closed the border to Mexican cattle again on May 11, 2025.  This closure is the next round following the closure in late November 2024 and reopening in February 2025.  The closure was prompted by continued expansion in screwworm cases in Southern Mexico.  Additionally, new cases were reported as far North (or West as you read the map) as the states of Veracruz, Oaxaca, and Tabasco.  The narrowest part of Mexico, geographically the Isthmus of Tehuantepec, has been considered an important line of defense because this is where the country begins to widen. The widening area leads to more land area to treat, making effective control that much more difficult.

Since the border was reopened to cattle in February, feeder cattle imports rebounded to about 20,000 head per week.  Imports have remained below 2024 and the previous five-year average.  Additional inspection and quarantine regulations likely slowed the pace of imports, as well as not all ports of entry operating for cattle.  Only 4 of the 11 ports of entry for cattle have been operating.  For example, of the six Texas ports of entry, only Presidio had cattle crossing since the border was reopened.  Santa Teresa, New Mexico is the largest cattle port of entry, and it had been operating since the week of February 8, 2025.

Feeder cattle imports from Mexico peak seasonally in the Spring and Fall.  Over the 10 years from 2015-2024, feeder cattle imports from Mexico averaged 5.2 percent of feedlot placements into feedlots with over 1,000 head capacity.  Presumably, most of those cattle are placed into feedlots in Texas and the Southwest.  Annual feeder cattle from Mexico was the equivalent of  18.0 percent of annual feedlot placements in Texas, Oklahoma, Arizona, and California over the 2015-2024 period.

The loss of feeder cattle imports will further tighten feeder cattle supplies.  Already record high calf prices will likely see some more upward pressure.  The loss of these cattle will further pressure feedlots in the Southwest as well.

Anderson, David. “Screwworms, Part II.” Southern Ag Today 5(20.2). May 13, 2025. Permalink

May 13, 2025
Current Non-Real Estate Farm Debt

As mentioned in previous Southern Ag Today (SAT) articles (Martinez and Ferguson 2022, Martienz 2023), monitoring Non-Real Estate Farm Debt provides insight into debt health. Last year, there were periods of drought and increased input prices for producers. At the time of this article, planting is on everyone’s mind (completed or about to start), producers are bailing hay, and all prices in every supply chain are working their way through tariffs. The most recent reports offer insights through the end of 2024. As a refresher, every commercial bank in the U.S. submits their quarterly Reports of Condition and Income, which are known as call reports. Within these call reports are totals of agricultural loans and the status (on time or late) of the loans. Figure 1 displays the total loan volume (yellow line) and loan volume for three late categories (30-89 days late, 90+ days late, non-accrual) for the last 16 quarters (4 years). The totals are for all the Southern Ag Today States.

Through the end of 2024, non-accrual (blue line) loans continued to decrease, which is positive, and loans that are 90+ days late (grey line) remained relatively the same. Total loans (yellow line) are down from the previous quarter, which is expected due to seasonal trends. But, total loan debt is up 4.8% compared to 2023. The most concerning statistic is the loans that are 30-89 days late (orange line). At the end of 2024, debt that was 30-89 days late, was up 5.2% compared to the end of 2023 and the highest since Q1 of 2021. Q1 is seasonally the highest quarter for 30-89 days late loans, but given that it’s up from a year ago, the Q1 2025 reports will provide an indication of debt health in 2025 and moving forward.

From a sky high view, the call reports indicate that there are some possible caution signals for debt in the SAT states. Total non-current debt is approximately 1%, which is still relatively low. The next two quarters will provide answers if the signals are false alarms or true signals of concern. In the coming months, it is crucial that producers are mindful of their working capital and continue the positive production and risk management strategies they have implemented thus far.

Figure 1. Non-Real Estate Farm Debt from 2021 Q1- 2024 Q4

Source: Federal Financial Institutions Examination Council

References

Martinez, Charley, and Haylee Ferguson . “Current Non-Real Estate Farm Debt“. Southern Ag Today 2(30.3). July 20, 2022. Permalink

Martinez, Charley, and Parker Wyatt. “Current Non-Real Estate Farm Debt.” Southern Ag Today 5(20.1). May 12, 2025. Permalink

May 12, 2025
Defining Harm. Proposed Changes for the Endangered Species Act

A significant change to the Endangered Species Act (“ESA” or the “Act”) was proposed on April 17, 2025 which could significantly change the landscape to which ESA is applied, quite literally. The U.S. Fish and Wildlife Service (“FWS”) and National Oceanic and Atmospheric Administration (“NOAA”) (collectively the “Services”) propose to eliminate the current regulatory definition of “harm” under the Act. The ESA declares it unlawful for any person to “take” an endangered or threatened species. The Act defines a “take” as acts which “harass, harm, pursue, hunt, shoot, wound, kill, trap, capture, or collect, or to attempt to engage in any such conduct.”^[i]In 1995, the Services, through the regulatory rulemaking process, defined “harm” to include significant habitat modification or degradation which actually kill or injure protected species by affecting behavior patterns.^[ii] This definition has proven problematic for energy producers, agriculturalists, and foresters whose privately owned land may encompass suitable habitat for endangered or threatened species, even though the species itself may not actually be found there.

An extreme example of this came to a head in 2001, when owners of a Louisiana tree farm brought suit against FWS for designating 1,500 acres of the privately owned farm as critical habitat under the ESA because two historical breeding sites of the protected Mississippi gopher frog were located there even though the frog had not been observed there in nearly 40 years. Despite the ESA providing the Services authority to exclude areas from critical habitat designation where the benefits of such exclusion outweigh the designation,^[iii]conflict between farmers and ranchers in the southeast and application of the ESA to habitats for protected species such as the whooping crane, eastern indigo snake, gopher tortoise, red wolf, and others has intensified. The Services now propose to rescind the current definition of “harm” under the Act, stating that it is inconsistent with the statutory language, unnecessary, and does not reflect the single best meaning of the statutory text. The Services suggest that the word “harm” in the statute is clear enough without expounding further upon the term as the current regulatory definition does.

Though not yet final, the Services’ proposal to rescind the definition of “harm” is primed for legal challenges. The proposed rule would narrow the scope of the ESA’s reach by removing mention of habitat in consideration of whether one has harmed a protected species. This would have broad implications for energy producers, ranchers, loggers, and developers across the U.S. The proposed rule is open for public comment through May 19, 2025.^[iv]

^[i] 16 U.S.C. 1532(19) (emphasis added).

^[ii] 50 CFR 17.3. This definition was upheld by the U.S. Supreme Court in Babbit v. Sweet Home Chapt. Comms. for Ore. 51 U.S. 687 (1995). relying on the Chevron doctrine of agency deference which has since been overturned. See Loper Bright Enterprises v. Raimondo, 603 U.S. ___ (2024).

^[iii] 16 U.S.C. 1533(b)(2).

^[iv] https://www.regulations.gov/document/FWS-HQ-ES-2025-0034-0001

Friedel, Jennifer. “Defining Harm. Proposed Changes for the Endangered Species Act.” Southern Ag Today 5(19.5). May 9, 2025. Permalink

May 9, 2025
STAX and PLC: A Tale of Price Risk Protection in Two Markets

Commodity programs in Title I of the Farm Bill and the Federal Crop Insurance Program (FCIP) are the primary risk management tools available to agricultural producers. In a previous SAT article, Fischer and Biram (2025) discussed the suite of risk management tools available to cotton producers, the intention of Title I programs to supplement tools in the FCIP, and the different combinations allowed for producers to use in a risk management strategy. Notably, they discuss how base acres enrolled in either Price Loss Coverage (PLC) or Agriculture Risk Coverage (ARC) cannot be enrolled in the Stacked Income Protection (STAX) program. Since 87% of historical seed cotton base acres have been enrolled in PLC (USDA-FSA, 2025), with nearly all base acres enrolled in 2019 and 2020, this discussion focuses on the complementary nature of STAX and PLC.

On the surface, STAX and PLC may appear to be similar programs authorized under different pieces of legislation. However, a closer look reveals stark differences. STAX is a tool in the FCIP which provides protection against revenue losses based on a chosen coverage level, a cotton lint futures price, and a county cotton lint yield. PLC is a counter-cyclical target price program under Title I in the Farm Bill which provides only price downside protection determined by the effective reference price (ERP) and a Marketing Year Average Price (MYAP) for seed cotton. The ERP is a function of the statutory reference price determined by federal law and historical market conditions. More specifically, the seed cotton price is a production-weighted average of upland cotton lint and cotton seed prices (see Shurley and Rabinowitz, 2018and Liu, Rabinowitz, and Lai, 2019a). STAX requires a premium to be paid by the producer while PLC requires no out-of-pocket cost for enrollment. STAX pays indemnities based on planted acres and county cotton lint yield and price, while PLC payments are based on base acres and MYAP for seed cotton.

While STAX and PLC both provide price risk protection, it is in different markets and under different conditions. STAX provides price risk protection against declines in the futures market between planting and harvest with different regions of the country facing different price determination periods – and only to the extent that those declines are not offset by yield gains (see Liu, Chong, and Biram, 2024). PLC provides price risk protection against declines in the cash market within a crop marketing year which is August 1^st through July 31^st of the following calendar year (USDA-FSA, 2023). PLC protection is triggered when the MYAP falls below the ERP with the PLC payment rate being the difference between the ERP and MYAP.

Since these two risk management tools provide different forms of price protection, it is no surprise that STAX indemnities based on price losses (i.e., in excess of any offsetting yield gains) differ from PLC payment rates. In the period authorized for risk protection in the 2018 Farm Bill (i.e., 2018-2024P), there was only one year in which both programs triggered, with 2024 projected to trigger at current prices. In 2019, the PLC payment rate for seed cotton was $0.0612/lb (see Figure 1) while the cotton lint STAX indemnity for price loss would have been $0.0310/lb (see Figure 2) which only would be for the 90% coverage level. There were three years when one program would have triggered when the other did not (2018, 2020, and 2022). The remaining two years saw no payments triggered by either program.

We acknowledge that these payment rates are based on different triggers (i.e., weighted average seed cotton price versus cotton lint price) and refrain from discussing the magnitude of the differences. Instead, we emphasize the fact that these programs often do not trigger in the same year, reinforcing the idea that these differences imply the need for risk protection in both the cash and futures markets, mitigating basis risk (see University of Arkansas fact sheet). As a result, Congress may wish to consider making both PLC and STAX available for a producer to use in the same crop year since they meet different risk management needs.

Figure 1. Historical Performance of Price Loss Coverage (PLC) for Seed Cotton (2018-2024P) This figure shows the years in which a seed cotton PLC payment triggered. The orange bars show the MYAP, while the yellow dashes show the ERP. The triangles denote the PLC payment rate recorded that year. When the orange bar is the below the yellow dash, a PLC payment triggers, and the triangle depicts the payment rate.

Figure 2. Historical Performance of Stacked Income Protection (2018-2024P) This figure shows the years in which a STAX payment would have triggered in a county with constant yields. That is, if the county yield did not fall, it depicts what the Harvest Price would have to fall to in order for an indemnity (i.e., insurance payment) to trigger. The blue and green bars show the price guarantee based on 85% and 90% coverage levels of STAX, respectively, while the red dashes show the RMA Harvest Price. The blue and green triangles denote the STAX indemnity recorded for the 85% and 90% coverage levels, respectively, in a given year. When the blue or green bar is below the red dash, a STAX indemnity triggers, and the triangles depict the payment rate.

References

Biram, H.D. and Connor, L. (2023). Types of Federal Crop Insurance Products: Individual and Area Plans. University of Arkansas System Division of Agriculture, Cooperative Extension Service Fact Sheet No. FSA75. https://www.uaex.uada.edu/publications/pdf/FSA75.pdf

Fischer, Bart L., and Biram, H.D. “STAX and PLC: Should Cotton Producers Have to Choose?” Southern Ag Today 5(15.4). April 10, 2025. Permalink

Liu, Y., F. Chong, and Biram, H.D. “Cotton Crop Insurance: Unveiling Regional Differences in Projected and Harvest Prices.” Southern Ag Today 4(4.3). January 24, 2024. Permalink

Liu, Y., Rabinowitz, A. N. & Lai, J. H. (2019). Understanding the 2018 Farm Bill Effective Reference Price. Department of Agricultural and Applied Economics, University of Georgia. Report No. AGECON-19-02PR. July 2019.

Liu, Y., Rabinowitz, A. N. & Lai, J. H. (2019). Computing the PLC and ARC Safety Net Payments in the 2018 Farm Bill. Department of Agricultural and Applied Economics, University of Georgia. Report No. AGECON-19-13PR. November 2019.

Shurley, D. & Rabinowitz, A. N. (2018). MYA Prices and Calculating Payments with the Seed Cotton PLC. Department of Agricultural and Applied Economics, University of Georgia. Report No. AGECON-18-03. February 2018.

U.S. Department of Agriculture, Farm Service Agency. (2023). Agriculture Risk Coverage (ARC) & Price Loss Coverage (PLC). December 2023. https://www.fsa.usda.gov/sites/default/files/2024-12/fsa_arc_plc_factsheet_1223.pdf

U.S. Department of Agriculture, Farm Service Agency. (2025). ARC and PLC Data. Date accessed: May 5, 2025. https://www.fsa.usda.gov/resources/programs/arc-plc/program-data

U.S. Department of Agriculture, Risk Management Agency. (2023). Stacked Income Protection Plan (STAX) for Upland Cotton. January 2024. https://www.rma.usda.gov/sites/default/files/2024-02/STAX-Upland-Cotton-Fact-Sheet.pdf

Biram, Hunter, Bart L. Fischer, Yangxuan Liu, Will Maples, and Amy Hagerman. “STAX and PLC: A Tale of Price Risk Protection in Two Markets.” Southern Ag Today 5(19.4). May 8, 2025. Permalink

May 8, 2025