Key drivers shaping grain prices in 2025

We can point to three primary drivers of market drivers postharvest this year which are 1) Strong Demand + Lower Grain yields + Managed Money short position covering flipping to a near record long = higher grain prices 2) Headline risk looms large, including South American weather importance in this time frame 3) farmers have rewarded the rally with sales in a meaningful way.

The 2024 crop is one that defies “big crops get bigger.” With a tough finish to the year and moisture right out of the field on corn coming in sub 14%, this supports the USDA drop in corn yields. The 276-million-bushel production drop from November to January in USDA reports is the 2nd largest change, second only to the derecho year. Prior to harvest, the marketplace was gearing up for a 14+% stocks to use ratio on 2 billion plus carry out only to find ourselves closer to 10% with 1.5 billion bushel of ending stocks on corn, which is a fundamental shift. Soybeans also have felt the crop and expected carry outs drop, although the balance sheet on beans is adequately balanced. After these large adjustments from USDA in December and January reports, the February 11th report left domestic S&D tables unchanged for both corn and soybean carry outs. The managed money crowd has worked themselves out of a near-record short position to a near-record long position, all helping to explain an 85 cent move higher post-October harvest lows on corn, while beans have seen an almost a $1 rally since December lows were put in. 

External market forces have also had large impacts on the grain markets. Tariff talk on Columbia, Mexico, Canada, and China have left the trade weary on whether agricultural products will be included on retaliatory tariffs and what negative impacts that could have on our international trade. All of these have a large potential to disrupt the export trade flow and the market’s job is to price these uncertainties into prices.

One concern that has been in the marketplace for over a year now has been over Mexico’s proposed ban on biotech corn imports following the presidential decree in February 2023. That proposal has now been repealed with our number 1 corn trading international partner.

Pine Lake Corn Processors and IAS continue to patiently await full guidance from Washington, D.C., regarding biofuels feedstock initiatives (IRA and 45Z). We understand the value that this brings to our membership’s bottom line, the impact to the marketplace and demand growth, and we are continuing to work on ways we can work together once rules are finalized.

With all the market noise mentioned above, we are excited that many of our members have attended our Winter Grain Marketing meetings throughout our territory to hear from some of the trusted resources the IAS grain team works with daily to manage risk.  The IAS Grain team is around to have further discussions regarding any of the topics covered at these meetings and what tools best fit your market bias to lock in prices, a floor price, or capturing premium from the market over today’s price.  

Thank you for your business.