Farm Credit East recently invited two experts to present data at the 2025 Grain and Oilseed Outlook. Tanner Ehmke and Jacqui Fatka are CoBank lead economists, specializing in grains and oilseeds and farm supply and biofuels, respectively.
Ehmke provided a baseline of where the industry sat at the top of the year in terms of pricing, supply and demand. It’s understandable that an oversupply of a product will lead to a low-price environment, designed to “[increase] demand while at the same time discouraging production.”
When looking at prices, 2024 overall was “a down year for commodities.” The U.S. had a massive oversupply of soybeans. Last year, the U.S. had its “second biggest soybean crop on record,” Ehmke said, in addition to a large overstock remaining from the year prior. While Brazil becomes a more competitive exporter due to their currency collapsing, soybean prices domestically “fell a little over 20% over the past year.”
Soft red winter (SRW) wheat prices dropped about 10% over the past year, and corn prices were down almost 1%. As of January 2025, the U.S. has record corn supplies, with “the second biggest corn crop on record.” Although prices have dropped due to the large supply, the demand for corn is so high that it was able to recover and has been “the surprising success story” for the year.
When looking at how many bushels of product were made throughout the world vs. what was used within the year, “numbers would indicate that we’re [limited on products] … and therefore prices should be much higher,” explained Ehmke. However, “the story is distorted by the value of the dollar” and “currencies are taking a bigger role now than they’ve ever had.”
Ehmke highlighted how the strong dollar in America has inhibited the country’s ability to export compared to competitors. As this strong dollar increases in value, U.S. export products become more expensive, and importers turn to other competitors for purchase. As of January 2025, Ehmke said, “the United States is no longer the number one exporter of corn, wheat and soybeans.”
As of Jan. 1, 2025, U.S. export commitments were up for corn, soybeans and wheat, but mostly due to our high supply. The majority of U.S. corn and wheat exports go to Mexico, and U.S. soybeans go to China; however, “soybeans and wheat [exports] have suffered quite a bit because [the U.S. has] lost export market shares” to other competitors like Russia and Brazil, Ehmke said.
This graph shows the relationship between the strength of the U.S. dollar and the ag export price. Image courtesy of CoBank
In the upcoming year, the American trade market should keep an eye on Mexico’s and Brazil’s economies. Ehmke is anticipating the Mexican economy to weaken due to a trade war with the U.S., decreasing the value of the peso and “diminishing their purchasing power.” A presidency change in Brazil led to the weakening of their currency, and “has made their exports very competitive versus the U.S.” Brazil is also anticipating record corn and soybean crops this year due to favorable weather.
Corn, soybeans and wheat have a strong domestic feed demand but are also increasing in popularity in the biofuel sector. Ehmke noted that the biofuel industry makes “a huge impact on what happens to the grain and oilseed balance sheet.” Fatka stressed how much is dependent on supply and demand in agriculture.
It’s no secret farmers need to make an income to stay in business, and production expenses are not dropping nearly as quickly as commodity expenses. As the world works to shift to more renewable and clean energy, Fatka stated how extra aid is expected to be offered to farmers to help with high input costs.
There continues to be a strong demand for fuel ethanol and renewable diesel around the world. Fatka is anticipating “a strong year … on ethanol exports,” with Canada being America’s top partner.
The Biden Administration previously made a challenge to produce three billion gallons of sustainable aviation fuel (SAF) domestically by 2030. Although domestic SAF use grew tenfold (from five million to 52 million gallons) by the middle of 2024, only 16 million gallons were produced domestically – the rest were imported from other countries. The goal to produce three billion gallons of SAF by 2030 is possible, but will take a lot of work over the next few years.
Overall, Fatka believes there are many opportunities for the U.S. ag industry “to continue to be profitable” and thrive in the new year. Ehmke fully anticipates a shift in farming acreage toward corn, as “the market is signaling there’s a clear preference for corn versus soybeans and wheat.”
In fact, if corn prices continue to be so competitive compared to wheat and soybeans, Fatka and Ehmke “wouldn’t be surprised to see the corn acreage number north of $94 million” in the near future.
by Kelsi Devolve
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