JPM-Fertilizer Industry Update USDA August WASDE：Much Higher Corn Inventories-20250812

•Big corn yields and big planted acres. High grain inventories are generallynegative for corn prices and for domestic producers of seeds and fertilizers.Corn demand estimates were lifted to record levels of 16b bu, and there is riskto the forecast, in our view. Corn spot prices are trading down (~3%) followingthe report. The corn stocks-to-use ratio is higher at 13.3% (+250 bps vs last est.)reflecting higher yields, higher planted acres, and higher exports/feed/ethanoldemand. Soybean spot prices are trading higher ~1%, reflecting a (40 bps)shave to the stocks-to-use ratio based on lower soybean acres planted, partlyoffset by higher yields. Domestic corn good-to-excellent ratings remain highat 72% on Aug. 10 vs. 67% y/y. Soybean good-to-excellent ratings are at 68%vs. 69% y/y. Crop yields were lifted by 7.8 bu/ac for corn and by 1.1 bu/ac forsoybeans, leading to higher corn production, and lower selling prices.

•The USDA projects U.S. corn ending stocks at 13.3% (prev. 10.8%) for thesummer of 2026 vs. 8.5% (prev. 8.7%) for the summer of 2025 (ends Aug.31, 2025). The U.S. corn production forecast is 16,742m bu (prev. 15,705m bu)vs. the Street est. of 15,746m bu. This is based on 97.3m ac (prev. 95.2m ac)planted in 2025, 88.7m ac (prev. 86.8m ac) harvested, and an avg. corn yieldof 188.8 bu/ac (prev. 181 bu/ac) and the Street est. of 184.3 bu/ac. The demandforecast is 15,955m bu (prev. 15,410m bu), up 635m bu y/y, based on 425m buhigher y/y feed/residual demand, 130m bu higher ethanol demand, and 55m buhigher y/y exports. The USDA’s est. for corn ending-stocks for 2025/26 is2,117m bu (prev. 1,660m bu) vs. Street est. of 1,918m bu. The avg. corn sellingprice est. for 2025/26 season was lowered by ($0.30/bu) to $3.90/bu vs. $4.30/bu for 2024/25. The Dec.’25 harvest month price is ~$3.93/bu.

•The stocks-to-use ratio for U.S. soybeans is projected to be 6.7% (prev.7.1%) for the summer of 2026 vs. 7.5% (prev. 8%) for the summer of 2025.Production forecast is 4,292m bu (prev. 4,335m bu) vs. the Street est. of 4,374mbu. This is based on 80.9m ac (prev. 83.4m ac) planted in 2025, 80.1m ac (prev.82.5m ac) harvested, and an avg. yield of 53.6 bu/ac (prev. 52.5 bu/ac) and theStreet est. of 53 bu/ac). Total projected use is 4,352m bu (prev. 4,415m bu) vs.4,404m bu y/y. Export est. were trimmed by (40m) bu to 1,705m bu vs. 1,875mbu y/y. US soybean ending stocks est. for 2025/26 is 290m bu (prev. 310m bu)vs. Street est. of 358m bu. The soybean selling price est. for 2025/26 is $10.10/bu vs. $10.00/bu for 2024/25. The Nov.’25 harvest month price is ~$10.25/bu.

•Global grain ending stocks est. is 25.9% (prev. 25.7%) of total supply for2025/26 versus 26.4% y/y. The global corn stocks-to-use ratio est. is lower y/yat 21.9% (prev. 21.3%) for 2025/26 versus 22.5% for 2024/25. Global cornending stocks of 282.5m tons (prev. 272.1m mt) are above the Street est. of277.8m tons. The global soybean stocks-to-use ratio est. is 29.4% (prev.29.7%) for 2025/26 versus 30.5% for 2024/25. Global soybean ending stocksof 124.9m tons (prev. 126.1m mt) are below the Street est. of 127.8m tons.

•We rate fertilizer producers NTR and MOS Overweight, and CF Neutral.We rate seed/crop chem producer CTVA and FMC Neutral.