As Southwest grain farmers edge closer to planting season, prospects for corn acreage appear to look better than soybeans.
“That’s one thing that has been consistent over the past two months,” says Texas AgriLife Extension Marketing Specialist Mark Welch, Bryan-College Station.
“We've had a nice rally in the corn market since the first of the year,” Welch said. “The December contract for corn is trading at $4.70 a bushel, a gain relative to soybeans, which suggests more corn acres in 2025 compared to last year. A bigger corn crop in 2025 would be a response to improving corn prices.”
Another positive for corn is stable fertilizer prices, relatively moderate now compared to the last few years. “That gives us a bit more optimism,” he said. “For now, we see managing costs for corn production in a more favorable light.”
Demand issues
Demand disruption could be a concern. “We still have some challenges in domestic use. We see indications of possibly expanding poultry and pork numbers but lower numbers of cattle on feed. There is concern about how much feed demand will grow,” Welch said.
“Ethanol use is another factor and is tied to gasoline consumption; we have not seen a lot of growth year-over-year in domestic gasoline use.”
Potential export disruptions create anxiety, Welch said. “For now, we are in good shape on the demand side for exports. If we maintain the ability to participate strongly in the global export market, if we're not restricted by issues around trades or tariffs, I think export potential looks positive.
“Strong exports,” he added, “puts us in better shape on the demand side of the balance sheet, because that's probably where we would be most vulnerable with significant destructions around trade issues. Trade disruptions could hit us hard, possibly pushing prices lower, especially if corn acres increase and we have decent weather for 2025.
“That combination could set us up for a big corn crop, so we will need all those demand categories working for us to maintain a good price. Trade issues could hit us hard.”
Competition
A growing concern is competition out of South America, specifically, Brazil and Argentina.
Brazil is especially important, Welch said. “Brazil’s spring grain crops, planted last October and November, are coming out of the field now. Brazilian farmers will plant a second corn crop after soybean harvest. They plant in March, similar to doublecrop practices in the Southern U.S. That's their big corn export harvest.
“If Brazil gets favorable weather and strong prices, they will compete for export space. If the U.S. encounters trade disputes, the Brazil corn crop will be in play in the export market,” Welch said.
“The global market is a more competitive place compared to five to six years ago. China has built relationships with numerous countries, building ports and infrastructure, and spreading out where they buy grain. The global market is a dynamic marketplace in which impediments or barriers can have a significant impact for U.S. producers.
“If market disruptions arise, we will see export challenges. Exports are extremely important for U.S. grains.”
Strong export pace for now
On the bright side, Welch said the current export pace for the current market year for U.S. corn and wheat is strong. “If we don't have a significant disruption, export prospects look brighter compared to a year ago.
“We will be watching what official agricultural and trade agencies are thinking for the 2025 marketing year,” Welch said. “The upcoming USDA Outlook Conference will offer the first projections, not official estimates but model projections. We will watch those projections carefully.”
The February 11 WASDE indicated markets have not moved much.
“Uncertainty around trade will be with us for a while,” Welch said. “So, producers need to put production and marketing plans in place to protect themselves against any market impact. Prepare in case prices drop.”
Master Marketer
He said Texas AgriLife offers marketing programs to help producers develop those plans. Master Marketer programs will be available into spring.
“The two-day model Master Marketer programs offer options for developing plans of action for marketing risks for crop and livestock,” Welch explained.
“We’re moving around the state to reach more people and more areas, so producers can learn more about the part of the business that’s hardest to manage.
“We'll be doing one in Lubbock, February 27th and 28th for cotton. We will be in Waco in late March for feed grains. We will go to South Texas, Weslaco, in April for feed grain marketing.”