Baird analysts on Wednesday said that swollen inventories of corn and soybeans could postpone a rebound in demand for large agricultural machinery in North America until 2028. The assessment follows government crop report releases that continued to indicate oversupply in key row crops.
The U.S. Department of Agriculture reported corn ending stocks on June 1 at 5.294 billion bushels, a 14% increase from a year earlier and near levels not seen in decades. That total was slightly under the consensus estimate of 5.392 billion bushels. Projected corn acreage for the 2026/27 season reached 95.34 million acres, the fourth highest since 1944 and a touch above the consensus of 94.99 million acres.
Corn market moves were modest intraday, with prices rising to just over $4.10 per bushel while generally hovering around the $4.00 range. Baird’s analysis notes that farmer breakeven levels sit above $5.00 per bushel. The July 2027 futures contract was reported at $4.70, down from readings above $5.00 a month earlier.
For soybeans, ending stocks as of June 1 were 1.061 billion bushels, slightly higher than the consensus estimate of 1.051 billion bushels. Acreage projected for 2026/27 matched expectations at 85.37 million acres. Soybean prices pulled back toward $11.00 per bushel, with the July 2027 contract at $11.70. Baird places typical farmer breakeven levels for soybeans nearer to $13.00 per bushel.
Wheat ending stocks were reported at 920 million bushels, noted as 2% above the 935 million bushel consensus. Wheat acreage for 2026/27 came in at 42.70 million acres versus a consensus of 43.858 million acres.
Baird highlighted a disconnect between current crop prices and input costs, and said that elevated government subsidy levels together with favorable crop conditions make it difficult to identify a clear near-term catalyst for higher commodity prices unless a significant weather event occurs. Given these dynamics, the firm warned that risks are growing for 2027 equipment order periods to potentially decline on a year-over-year basis.
Implications
- The crop supply picture and price levels reduce near-term incentives for farmers to accelerate purchases of large machinery.
- Equipment manufacturers and their supply chains could face weaker order flows through 2027, shifting expectations for backlog conversion and working-capital dynamics.
- Commodity market participants may see limited upside in crop prices without an external shock such as adverse weather.