USDA’s January reports placed corn prices under pressure on a record 18.6 billion bushels of supply.
Corn prices look to remain range-bound unless there is an unexpected deterioration in supply or stronger-than-expected demand. The next major round of USDA reports in late March will set the tone for prices for the year and bear monitoring.
Despite a weakening dollar and uncertainty on the geopolitical front, the prospect of prices moving markedly higher seems slim. Record corn inventories add to the bearish tone despite strong demand. Domestic supply expectations for the next year will be set with the release of the Prospective Plantings report March 31.
Most market observers expect lower corn acreage than the 98.8 million acres planted in 2025. A note of caution should be noted given the small decrease in winter wheat acreage shown in January.
U.S. corn demand continues to eat into the massive crop. Export demand shows unprecedented levels for corn this year as lower prices bring out buyers around the world. For the marketing year, USDA projects U.S. corn exports will reach 3.2 billion bushels. Exports appear slightly ahead of pace to meet current projections.
Competition remains limited at current U.S. corn prices. A supply disruption in the Southern Hemisphere could provide additional support. Although there is considerable speculation forthcoming about the crops in South America and the second crop in Brazil in particular, no major problems appear prominent yet in that region.
Domestic ethanol production continues to be strong. First quarter corn usage for ethanol came in at 1.38 billion bushels, on par with the first quarter of the 2024-25 marketing year. Since Dec. 1, weekly ethanol production has been seasonally strong and well above last year’s levels. For the current marketing year, USDA projects the amount of corn used for ethanol and co-product production at 5.6 billion bushels.
At present, corn use for ethanol in the last three quarters of the marketing year requires a 4% growth in corn usage over last marketing year. Recent growth in production makes this forecast feasible.
USDA’s projection for feed and residual usage is the most in-question demand component in corn forecasts. The rate of feed and residual use of corn during the first quarter of the marketing year came in at 2.74 billion bushels, 44.2% of the 6.2 billion-bushel forecast. Over the last five years, first quarter feed and residual use averaged 42.2% of the marketing year total.
The March 1 grain stocks report to be released March 31 will provide another data point of feed and residual use since the data for this usage category is derived from other data and not directly observed. Given the size of livestock herds and flocks, USDA is assuming a large residual that may or may not materialize.
Corn prices will stay near the present range under current economic conditions and crop expectations. A narrow sideways price pattern is expected over the near term due to record production and high ending stocks placing a limit on upside potential. A rise in prices requires a deterioration on the supply side or a substantial uptick in economic activity if the March USDA reports provide no surprises.