2025 Corn Outlook: Export demand gives price reprieve

PEORIA, Ill. — Bolstered by surprises in the December supply and demand estimates report, corn enters 2025 with strengths in exports and ethanol demand.

The U.S. Department of Agriculture surprised the market with hikes in corn exports by 150 million bushels and corn for ethanol use by 50 million bushels in last month’s balance sheet.

“The one thing we’ve seen is maybe more confirmation that old crop corn demand may be a little bit more real,” said Joe Janzen, University of Illinois agricultural economist.

“There was this notion that corn demand was a little more front-loaded this year with people trying to avoid the potential retaliatory tariffs and moving those sales up. That still may be true to some degree, but there’s some confirmation that we’re in a pretty good export picture for corn and soybeans, but especially for corn.

“Just thinking about the overall supply and demand picture, we thought we were going to keep building stocks and that’s going to be the overhang that prevents any sort of rally that might occur in the new year either on old crop or new crop pricing. We got a little bit of a reprieve from that.

“We’re still in a pretty well-supplied market situation, but definitely now there is the potential. I mean the market is already giving us some of that with corn price closer to $4.50 per bushel than $4.”

Demand Trifecta

Janzen compared corn demand to a three-legged stool, led by feed, ethanol and exports.

Ethanol use represents 36% of corn use, feed is 39% and exports 16%. The remaining 9% is for feed and other industrial use.

“Exports are really kind of the flex piece that picks up the slack when we have a big crop like we had last year,” Janzen said.

“We’ve seen two solid months of really strong exports sales, particularly between the U.S. and Mexico. In the last few months, the export sales pace of actual shipments has moved above what is sort of normal for this time of year.

“Up to just before Thanksgiving, we’ve already shipped off about 1.25 billion bushels. That’s more than halfway to our total export sales for this marketing year. That’s above the historic pace, above the pace that we saw last year.

“Even if we don’t maintain this strong pace, we should get to USDA’s projection and fill that demand side of the balance sheet the way the market expects at this point.”

There has been a lot of chatter about the extent to which these sales — particularly to Mexico — are front-loaded to potentially avoid U.S. tariffs.

“If Mexico was to impose retaliatory tariffs on corn, they’d like to have a bulk of their exports for this year done before that happens,” Janzen said.

“I think the trade has a very mixed mind about that. I do think we can get to that 2.3 billion bushels this year. We’ve had such a good start already to the export program for corn to Mexico, but also to Latin America.

“Colombia is a major destination for U.S. corn. That’s really been a bright spot where we were shipping a lot of corn to China two or three years ago and that really has shut down.”

Production, Use

For 2024-2025, the USDA is anticipating continued supply growth, but not to the extent seen year-over-year between 2022 and 2023 in terms of total available supply of corn.

“We saw it grow more slowly, but we also anticipated usage would grow the same way that it did. Last year we saw the pace of use decline as we moved through the year. We saw a lot of corn move, particularly through the summer, that got us to a lower stocks-to-use number than we were anticipating,” Janzen said.

“I’m really looking at pace of use as a key indicator. I’m also thinking about yield and acreage for next year. We saw a lot of reports of good yields this last growing season in different parts of the country.

“For historical context, the trend yield for U.S. corn and soybeans yields have followed a remarkably stable trend with 35 years of basically linear growth. We deviate from trend line a little each year, but it’s remarkably consistent.

“U.S. farmers have been able to grow yields using modern technology and production practices, high-quality farm management techniques. We saw a pretty big crop, but only slightly above trend line.

“It’s not outside of the historical experience to see 10 bushels per acre above trend. If we get 10 bushels above trend, prices will have to move lower, especially at harvest.”

Price Ratio

The corn-soybean price ratio favors corn in 2025.

“I think USDA has it right that it will favor corn in 2025 and we will see a swing back to corn acres,” Janzen said.

“Since 1990, that ratio has been about 2.3 and over the last decade that’s favored corn strongly over soybeans.”

What does all of this mean for corn going into 2025?

“We will get more certainty about that international demand peak,” Janzen said.

“USDA’s long-run production projection is a pretty conservative estimate for production at 182 bushels per acre (for its 2025-2026 baseline) with a little bit of a pullback in export demand to 2.275 billion bushels.

“Putting that all together, we’re still adding 300 million bushels to ending stocks. We’re continuing to grow the stocks-to-use ratio. That’s going to weigh on the market going forward.

“There is a little bit of good news as we think about what that means for prices. I think we are down in a level where we’re going to see some responses by some of our trading partners to low prices and see some of that crops soaked up in terms of ending stocks and prices don’t fall that much further.

“But they do have to fall a little bit if we see higher corn acres. Prices kind of line up with that expectation.”