From record-setting corn exports to unresolved trade negotiations and a new round of federal support payments, grain markets are sending mixed signals as producers begin to think beyond the current marketing year. While headlines point to strong demand and government assistance, underlying supply dynamics and policy uncertainty continue to weigh heavily on market confidence.
WASDE Offers Encouragement, But Supply Still Looms Large
The December WASDE report is typically considered a low-impact release, but this year’s update, released last week, caught the market’s attention with another sizable increase in corn export projections. That adjustment immediately invited comparisons to last year, when a similar move marked the beginning of a multi-month rally.
“We’re watching the price reaction off that WASDE because the similarities to last year are pretty incredible,” says Garrett Toay, principal with AgTraderTalk. “Last December, we had a 150-million-bushel increase in exports — the largest on record. We have 125 million this week. This week last year is when the rally in corn started and lasted through February.”
Despite that demand-side improvement, Toay says the broader supply picture remains difficult to ignore. Ending stocks are still large by historical standards, and upcoming USDA adjustments could reshuffle the balance sheet without meaningfully tightening supplies.
“We still have a fairly large carryout,” Toay says. “If we do get a yield reduction in January when they come in with final production numbers, I still feel there’s enough corn out there to keep the carryout relatively burdensome.”
He also notes that much of the demand strength is already embedded in USDA assumptions, leaving limited room for additional bullish surprises.
“We have a 600-million-bushel year-over-year increase in feed residuals,” Toay explains. “There’s a lot of demand that’s kind of baked into these S&Ds that could possibly be whittled away if they do cut supply.”
Record Exports Highlight Demand, But Prices Still Lag
Even as exports surge, corn futures have struggled to reflect that strength, raising questions about where the disconnect lies. For corn growers, the issue isn’t whether demand exists, but whether it’s translating into meaningful price support.
“We’re talking about record corn exports — 3.2 billion bushels — and we’re about 70% above where we were a year ago,” says Krista Swanson, chief economist for the National Corn Growers Association. “We’re off to a great start, but while this is a record in terms of volume, it’s not a record in terms of value.”
That distinction matters, she says, particularly in an environment of high input costs and tight margins.
“One of the problems is how does that value get back to the farmer?” Swanson says.
Looking ahead, acreage decisions will play a major role in determining whether supply growth continues to overwhelm demand gains. Swanson points to the soybean-to-corn price ratio as an early indicator of producer behavior.
“The soybean-to-corn price ratio is coming in really close to 2.5,” she says. “Above that favors soybeans, below that favors corn.”
After a historically large corn acreage year, some pullback appears likely — but even modest reductions would still leave the U.S. with substantial production capacity.
“Coming off such a high corn acreage year, we’re likely to see acres come down a little bit,” Swanson says. “But even if we came down to 95 million acres, that’s still a high corn acre year.”
That reality brings the focus back to demand expansion, both domestically and abroad.
“So, where does the demand come from?” she says. “We’ve seen good progress in trade agreements. Southeast Asia — Vietnam, Thailand — those markets have good potential. Diversified exports are one of corn’s strengths.”
Policy also remains central to that discussion, particularly ethanol blending.
“We are pushing for E15 to get done before Jan. 30,” Swanson says. “That’s the next funding deadline when Congress either has to act or go into shutdown.”
China Trade Uncertainty Weighs On Soybeans
Trade disruptions are a major reason those payments exist in the first place, and nowhere is that uncertainty more apparent than in ongoing negotiations with China. Conflicting messages around timing, volume commitments and enforcement have kept markets on edge.
“It feels like there’s a lost-in-translation aspect of these negotiations,” Toay says. “The White House wants China to buy a lot of soybeans. China wants to end the trade war and appease the White House, but we still don’t have a trade deal signed.”
While China has made purchases, Toay says they don’t reflect a return-to-normal commercial trade flows.
“The purchases we’ve seen have largely been from Cofco and Sinograin,” he says. “Those are government entities, and the beans are going into state reserves.”
Toay says while government entities might be buying, private crushers remain cautious about the current status of trade relations between the two countries.
“I don’t think you see private crushers in China buying U.S. soybeans until we have a trade deal,” Toay says. “There’s just too much risk.”
But he points out that uncertainty has also influenced speculative positioning.
“The funds started getting long when it looked like we were going to have a deal,” he says. “Now, with uncertainty about timing, they’re paring that back. If we get everything signed, sealed and delivered, the funds will know we’re good to go.”
Could Corn Enter The China Conversation?
While soybeans, sorghum and cotton dominate trade discussions, corn could still play a role if negotiations advance.
“I definitely think there’s a possibility,” Swanson says. “China is a big corn producer, but they’re also a big importer.”
She notes questions surrounding China’s domestic supply estimates.
“I’ve heard some rumblings that their corn production maybe wasn’t as big as the numbers indicate,” Swanson says. “If we have a deal, anything’s on the table, even though we haven’t seen that yet.”
Federal Payments Factor Into 2025 Outlook
Beyond market fundamentals, government support is shaping income projections for the coming year. USDA’s recently announced farmer bridge payments are designed to offset trade disruptions and weak prices, and early estimates suggest they could be meaningful for row-crop producers.
“We’re coming in with an estimate of about $45 for corn and $25 for soybeans,” says Gary Schnitkey, agricultural economist with the University of Illinois. “The corn payment is a little higher than the ECAP payment, and the soybean payment is a little lower.”
Schnitkey’s estimates are based on calculations by Nick Paulson of University of Illinois. He estimates the USDA per acre bridge payment will be:
- Corn: $46
- Soybeans: $25
- Wheat: $39
- Cotton: $115
- Oats: $92
- Rice: $134
- Peanuts: $64
- Sorghum: $48
- Barley: $21
While final rules have not yet been released, Schnitkey says the estimates are broadly consistent with other analyses across the industry. When you combine that with anticipated ARC and PLC payments, the amount of government payments that will go on this year’s balance sheets will be significant, but still makes margins tight.
“As we’re looking at incomes for 2025, we’re looking at almost $100 of federal payments [for corn and soybeans],” Schnitkey says. “That gives us a positive income projection for 2025.”
However, those payments largely arrive after expenses have already been incurred.
“That’s also putting about $100 of receivables on the balance sheet,” he says. “These payments are significant, but we will have cash flow issues for a while.”