The January U.S. Department of Agriculture’s World Agricultural Supply and Demand Estimates report provided a friendly surprise for corn futures, thanks to a lower-than-expected yield estimate.
The lower yield led to lower production, which ultimately brought down the ending stocks number for the 2024-25 crop year.
United States corn ending stocks are now estimated to be at 1.54 billion bushels, sharply lower than the December 2024 USDA estimate of 1.738 billion bushels.
The lower U.S. production number also impacted global corn carryout, which was reduced from 296.44 million metric tons to 293.34 million metric tons for the 2024-25 crop year.
Both lower ending stocks numbers were supportive to prices, and the corn futures market rallied in response.
From a marketing perspective
The lower ending stocks number may be priced into the market for now. Where to from here? Corn fundamentals may become mixed or uncertain, which may keep prices in check for the short term.
Looking ahead, now that the ending stocks number has been reduced, the market may perceive any global weather threat as a further reason for a potential price rally. The second crop corn in Brazil will be planted in the coming weeks, and if there is a dramatic weather challenge in Brazil, that may allow for a further corn price rally and hope that U.S. corn exports may increase.
On the flip side, this recent price rally has been said to have incentivized Brazilian farmers to plant more corn acres in the coming weeks. Also, the market is already anticipating that there will be an increase of 2 to 3 million acres of corn to be planted in the U.S. this spring. These expected additional acres will mean more corn production (barring a major weather event), which will alleviate the tighter ending stocks situation.
Lastly, global trade policies and U.S. biofuel mandates remain in question as the new administration sorts through information to make decisions going forward.
Prepare yourself
The recent rally allowed nearby corn futures to trade near the $5 a bushel range. Many farmers rewarded the rally with cash sales as the future of corn prices hinges primarily around global weather events, unknown trade policies and unknown biofuel policies.
Uncertainty lies ahead, and it is important that you make time for marketing and scenario plan for a potential friendly or negative price story to unfold in the corn market in the coming months.
If you have questions, you can reach Naomi at [email protected] or find her on X (formerly Twitter) @naomiblohm.
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