View the chart data
| Measure | September forecast | October forecast | Revision |
|---|---|---|---|
| Total supply | 17,747 | 18,154 | +407 |
| Total use | 16,180 | 16,305 | +125 |
| Ending stocks | 1,567 | 1,849 | +282 |
The U.S. Department of Agriculture raised its corn supply forecast on October 9. Its lower projected farm price could ease costs for ethanol producers while squeezing growers. This weekend analysis examines that forecast and the businesses exposed to it; the harvest figures remain estimates. [1]
More corn is expected to remain in storage
USDA now projects roughly 16 billion bushels of U.S. corn production for 2026/27. Both the crop estimate and corn carried over from the previous season increased. Expected use also rose, but less than supply. [1]
The projected average price received by farmers fell to $4.70 per bushel, from $4.80 in September. That is a season-wide forecast. It does not establish today's futures price or the delivered price at any individual plant. [1]
“With supply increased more than use, ending stocks rise by 282 million bushels to 1.8 billion.”
World Agricultural Supply and Demand Estimates · October 9, 2026 [1]
Ethanol plants have several ways to earn from corn
REX American Resources (NYSE: REX) offers a concrete example. Its plants make ethanol, a fuel blended with gasoline, and sell distillers grains and corn oil. Those additional products help determine what the plants earn from processing corn. [3]
Lower corn costs could leave more profit from those sales. The benefit depends on selling prices holding up: ethanol and feed-product prices can move independently of corn. REX uses purchase and sales contracts to manage some of that exposure. [3]
Its latest reported quarter shows why cheaper grain is only part of the story. Gross profit reached $53.3 million in the quarter ended July 31, including $18.4 million of production tax credit income. Those credits helped earnings; the entire improvement cannot be attributed to corn costs. [2]
There is also a physical expansion underway. In September, REX said it expected its One Earth ethanol expansion to become operational during fiscal 2026. Its quarterly filing describes permitted capacity rising from 150 million to 175 million gallons annually. That is a plan requiring successful completion, rather than additional output already reported. [2][3]
REX reported $379.5 million in cash, cash equivalents and short-term investments at July 31, with no bank debt. That provides resources for investment, although commodity swings and project costs still matter. [2]
Farm equipment faces the other side of the harvest
A grower may harvest more bushels yet receive less money for each one. Whether income improves depends on the extra crop, selling price and costs. If income weakens, replacing expensive machinery can become harder to justify.
Deere (NYSE: DE) was already seeing pressure in large agricultural equipment before this report. Its Production & Precision Agriculture sales fell 6% in the quarter ended August 2. The company cited lower shipment volumes, partly offset by pricing and currency movements. [4]
In August, management said it believed 2026 would mark the bottom of the agricultural equipment cycle. Friday's larger corn supply adds a challenge to that expectation if lower prices weigh on customers' spending. The crop report does not establish a new Deere earnings forecast. [4]
Deere also sells smaller equipment and construction machinery, so corn prices cannot explain its whole business. Borrowing costs, trade and other crop prices can change demand, too. [4]
The harvest's benefits will be uneven
More grain could ease an important input cost for ethanol plants while putting pressure on farm purchasing power. For REX, the result depends on product prices and execution. For Deere, it depends on whether customers can afford the next machine.
USDA's next scheduled supply-and-demand report is November 10 at noon Eastern. It will update a harvest outlook that can still change. The central issue remains how much of the larger supply reaches buyers, and at what price. [5]