The U.S. Department of Agriculture (USDA) released the May edition of its WASDE (World Agricultural Supply and Demand Estimates) report last week. 

While the monthly report from the government is typically a market mover for corn and soybean futures, the May report is exponentially so, as it offers traders the first look at the balance sheets for the new crop year. These numbers are far from final but give the USDA’s best guess at what corn and soy supply and demand might look like for the coming season. 

The May report is also interesting in that there are still notable old-crop changes that can occur via South America, along with the new-crop numbers. This makes the report a bit of a two-part event that, in the days of computer/algorithm trading, leads to increased volatility. Traders anticipate a bearish reaction by the markets, as ending stocks numbers for both corn and soybeans are expected to be higher than last year. 

For corn, the stocks increase comes via spillover from a record harvest in the 2023-24 season, as supply is actually seen lower than last year. Demand is also forecast to be slightly higher than last year on increases in both exports and ethanol use, among other things. The problem is that beginning stocks are nearly two-thirds more than they were to start last season. 

For soybeans, the balance sheet looks to see a similar increase in beginning stocks to...