A highly volatile corn market seems incredibly still in the wake of data that lowers ending stocks and new tariff threats from President Trump. StoneX Chief Commodities Economist Arlan Suderman said that’s because everybody’s waiting to see what China does.
And that’s why corn markets didn’t bump up this week following the July 4th holiday.
“There simply wasn't any news to push it higher [on Monday], and so it pushed lower,” Suderman said in today’s Ag Marketing IQ In Depth video episode.
Looking at supply and demand fundamentals, Suderman said the upcoming USDA reports on Friday could be cause for optimism.
“We do expect USDA on Friday to increase their old crop corn export target. And I think it could justify going up by another 75 million bushels,” Suderman said. “And we could actually see ending stocks for the current marketing year drop below one point three billion bushels.”
Another positive for corn exports is feed demand in Mexico.
“Mexico is going to continue to be a big customer because there's limits on the feeder cattle that can come north of the border because of the New World screwworm,” Suderman said. Mexico was bringing 30,000 cattle into the U.S. prior to the screwworm infestation, so even the partial opening in that gate now won’t significantly impact the number of cattle that need to be fed south of the boarder.
“Those cattle that can't come north will be fed in Mexico, which will require more corn imports, Suderman said. “And then they'll feed the cattle there and ship the beef here.”
Will smaller ending stocks and higher exports be enough to raise corn prices? Probably not, Suderman said, largely because Brazil is harvesting second-crop corn that is showing high yields.
The Brazil safrinha impacts U.S. export demand
With about one-third of the safrinha crop in the bins, yields are strong. Even with ethanol production increasing domestic use by 4-5 million metric tons, Suderman sees large exportable supplies impacting U.S. export opportunities by August and continuing into November.
"I find it very difficult to find a combination that allows us to hit USDA's export target for the 2025-26 marketing year," Suderman says.
Will China buy any soybeans?
On the soybean side, weather reports are increasing soybean production expectations despite smaller U.S. acreage, and China’s lack of interest is weighing down the market.
"If we continue on with favorable weather, then we're going to see supplies grow,” Suderman said. “China usually does a lot of buying of U.S. soybeans in the month of July for fall shipment. So far, they've booked virtually zero soybeans."
For those looking for something positive, Suderman said domestic soybean demand appears stronger than USDA projections.