The U.S. corn market kicks off 2025 with significant momentum, fueled by unexpected boosts in exports and ethanol demand reported in December’s supply and demand estimates from the U.S. Department of Agriculture (USDA).
The USDA surprised analysts by raising its projections for corn exports by 150 million bushels and increasing ethanol-related corn use by 50 million bushels, signaling robust demand for the crop.
Strengthening Demand
Joe Janzen, an agricultural economist at the University of Illinois, highlighted the shift in perception regarding corn demand.
“The one thing we’ve seen is confirmation that old crop corn demand may be more substantial than initially thought,” Janzen said. “While early sales may have been front-loaded to avoid potential retaliatory tariffs, there’s clear evidence of a strong export environment for corn and soybeans, particularly for corn.”
This improved demand has eased concerns about a growing stockpile, which many feared would cap market rallies in both old and new crop pricing.
“We’re still in a well-supplied market, but the potential for price increases exists. Current corn prices are nearing $4.50 per bushel, a notable improvement,” Janzen added.
Corn’s Three-Legged Demand Framework
Janzen likened corn demand to a three-legged stool comprising feed, ethanol, and exports, which account for 39%, 36%, and 16% of total corn usage, respectively. The remaining 9% is allocated to other industrial applications.
“Exports serve as the flexible component that absorbs excess supply during high-yield years, like last year,” he noted.
Export Dynamics
Recent months have seen robust export activity, particularly between the U.S. and Mexico. By late November, export shipments had exceeded 1.25 billion bushels—more than halfway to the USDA’s total export projection for the current marketing year.
“There’s speculation that some of these shipments to Mexico are front-loaded to preempt potential U.S. tariffs. Regardless, we’re on track to meet the USDA’s forecast of 2.3 billion bushels,” Janzen explained.
Mexico and Latin America remain key export markets, with Colombia emerging as a bright spot amid declining exports to China.
Supply and Usage Outlook
Looking ahead to the 2024-2025 marketing year, the USDA anticipates steady supply growth, albeit at a slower pace than the previous year. Demand is expected to follow a similar trajectory.
Janzen emphasized the importance of monitoring usage trends and crop yields. “Historically, U.S. corn and soybean yields have followed a stable growth trend, supported by advanced farming practices and technology,” he said.
Corn-Soybean Price Ratio
The price ratio between corn and soybeans in 2025 favors corn, suggesting a potential increase in corn acreage. Since 1990, this ratio has averaged 2.3, often tilting in favor of corn.
Projections for 2025 and Beyond
Looking further ahead, the USDA projects a conservative corn yield of 182 bushels per acre for the 2025-2026 baseline and anticipates slight declines in export demand to 2.275 billion bushels.
Despite growing stocks-to-use ratios, Janzen sees potential price stability.
“Low prices may encourage international buyers to absorb excess stock. While prices might dip further with higher corn acreage, we’re nearing a point of balance where significant price declines are unlikely,” he concluded.
Corn enters 2025 in a position of strength, bolstered by solid demand, steady exports, and optimism surrounding future price dynamics. As the year unfolds, market players will closely watch demand trends and acreage decisions, shaping the outlook for the commodity.
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