The United States Department of Agriculture (USDA) has unveiled its February 2025 World Agricultural Supply and Demand Estimates (WASDE) report, presenting a mixed outlook for U.S. and global crop inventories. The report surprised market analysts with its unexpected adjustments to corn, soybean, and wheat ending stocks. While corn and soybean stock levels remained unchanged from January, wheat stocks saw a slight decrease contrary to trade expectations. Globally, USDA forecasted lower ending stocks across all three crops compared to the average trade predictions. Additionally, the report highlighted significant changes in South American crop production estimates and revisions to China's import figures, influencing market reactions.

In the U.S., the USDA maintained steady estimates for both corn and soybean ending stocks for the 2024/2025 season, defying trade expectations which anticipated reductions. For corn, the agency kept the estimate at 1.54 billion bushels, while soybeans remained at 380 million bushels. This stability contrasts with the wheat sector, where the USDA projected a reduction in ending stocks to 794 million bushels, slightly below the previous month's figure and contrary to trade expectations of an increase. The agency attributed this change to higher domestic use, particularly in food production, which led to the reduced inventory.

Globally, the USDA's projections for 2024/2025 ending stocks also diverged from trade expectations. Corn, soybeans, and wheat all saw downward revisions. Corn ending stocks were estimated at 290.3 million metric tons, down from January’s 293.3 million metric tons. Soybeans were pegged at 124.3 million metric tons, a drop from the previous month's 128.4 million metric tons. Wheat stocks were similarly adjusted to 257.6 million metric tons, a marginal decrease from the earlier estimate of 258.8 million metric tons. These adjustments reflect a more cautious outlook on global supply and demand dynamics.

For Argentina and Brazil, key players in global grain markets, the USDA made notable adjustments. In Argentina, corn production was revised downward to 50 million metric tons, though not as drastically as trade expected. Soybean production was also lowered to 49 million metric tons, surpassing the anticipated decline. In Brazil, corn production faced a modest reduction to 126 million metric tons, below trade expectations. Soybean production remained unchanged at 169 million metric tons, despite forecasts suggesting an increase. These shifts underscore the volatility in South American agricultural output.

Market participants reacted with surprise to the USDA's decisions. Jeremy McCann, an account manager at Farmer’s Keeper, noted the unexpected stability in U.S. corn and soybean stocks and the reduction in wheat inventories. He pointed out that strong export demand, especially for corn, had set up expectations for a decrease in ending stocks, which did not materialize. McCann also highlighted significant cuts in Argentina's corn and soybean production, as well as reductions in China's import forecasts, which have influenced market sentiment. Naomi Blohm, a senior market advisor at Total Farm Marketing, remarked on the overall lack of major surprises in the report, predicting sideways trading patterns as traders shift focus to geopolitical factors and weather conditions in South America.

The February 2025 WASDE report underscores the complexity of global agricultural markets. Despite some unexpected adjustments, the USDA's projections provide valuable insights into the balance between supply and demand. Market participants will closely monitor these trends, particularly the impact of South American production and Chinese import policies, as they shape future price movements and trading strategies.