COMMODITIES 2025: Looming trade war to shape course of a bearish corn market in Americas

This is part of the COMMODITIES 2025 series where our reporters bring to you key themes that will drive commodities markets in 2025.

Americas corn markets are heading towards a pivotal year in 2025, with market participants anticipating shifts in trade dynamics with Donald Trump's return to the office amidst increasing bearish sentiments around prices.

Analysts expect a strong demand for US corn in 2025, fueled by robust ethanol production and exports. Platts, part of S&P Global Commodity Insights, assessed FOB Gulf Coast prices as competitive and trading lower than Brazil and Argentina since November.

In Brazil, rising domestic demand, primarily for ethanol, is expected to take a toll on exports and lower competitiveness in the global market, while Argentina's promising output could find potential opportunities in the event of a trade war, according to sources.

"Oversupply" from South America is expected to put downward pressure on prices in the coming year, but market participants do not rule out an upward support from a potential escalation in the Black Sea region.

US corn markets await Trump's course

Commodity Insights' price outlook for US corn is forecast at $3.90/bushel in marketing year 2025-26 (September-August), with a year-high futures trading range of $5.08/bu seen in July, against a year-low of $3.17/bu anticipated in December 2025.

Analysts expect an upside risk to corn futures driven by robust demand for US corn, and a downside risk linked to the soybean market, whereas changes in South American production may present risks in either direction.

US MY 2025-26 corn production is expected at 15.66 billion bu, with exports projected to reach 2.4 billion bu, and carryouts at 2.062 billion bu, analysts said.

In 2025, Donald Trump's return to office, and a potential restoration of a sanctions regime is seen as decisive, with implications on trade with China as well as Mexico – the top destination for US corn.

However, domestic biofuel policy remains a silver lining for the US, with strong ethanol production expected to support exports.

"The robust ethanol and export use of corn is expected to support corn prices to the degree that US farmers will choose to favor planting corn rather than soybeans in 2025," Mary Kate Porath, senior analyst at Commodity Insights said.

Commodity Insights forecasts US MY 2025-26 corn for ethanol usage at 5.5 billion bu, unchanged on year.

A potential trade war with China would significantly impact soybean prices, and subsequently pressure corn prices lower, while retaliatory responses to the US' trade restrictions could substantially reduce US corn exports to Mexico, and ethanol supplies to Canada, Porath added.

Domestic demand to pressure Brazilian exports

Analysts forecast Brazil's local MY 2024-25 (February-January) corn production at 128 million mt, while exports are projected at 37 million mt.

"Prices are at their highest levels (in nominal terms) since mid-2023 in several locations and that will result in a larger planted area in the 2025 second crop ("safrinha"), which accounts for about 75% of the production and the bulk of the country's exports," Daniele Siqueira, market analyst at AgRural said.

However, production in MY 2024-25 is not expected to surpass the record made two years ago, and "considering that the Brazilian domestic demand will increase again in 2025 due to several new ethanol plants and favorable conditions in the animal feed sector, Brazil will probably be a timid exporter in 2025, Siqueira added.

Nearly 20 corn-based ethanol plants are currently under construction or expansion, with operations expected to commence between 2025 and 2026, according to analysts.

A US-China trade war is expected to support supplies coming out of Brazil, which is the biggest corn exporter to the Asian country, whilst also sharing a comprehensive and favorable trade ecosystem.

However, domestic demand for corn in Brazil is heading towards an upward trend, with the South American country pushing for ethanol production, which is expected to take a toll on corn exports and lower competitiveness in the global market.

"Corn ethanol production is expected to reach 8.7 billion liters by the 2025-26 season, requiring approximately 19.4 million mt of corn," Geraldo Isoldi, agricultural markets analyst at King Korn said. "It is estimated that corn ethanol production, combined with the increase in cattle feedlot operations, will drive domestic corn consumption to 87.7 million mt this season."

"By 2032 to 2034, (corn for ethanol) consumption is forecast to reach 109.8 million mt, representing a 30.4% increase, while in the upper range of projections, (total) domestic consumption could climb to 130.3 million mt, a 54.7% rise compared to the 2023-24 season," Isoldi added.

Isoldi said that Brazilian corn sales to the international market are expected to rise to 58.3 million mt over the next 10 years, however, "with the increasing production of biofuels derived from corn, a new scenario is emerging where food demand will compete with the energy sector, likely driving prices upward."

Argentinian weather, prospective supplies to China

Analysts expect Argentina's local MY 2024-25 (March- February) at 47 million mt supported by favorable weather conditions, while exports are forecast at 33.5 million mt.

Domestic demand is seen at 15.3 million mt in MY 2024-25, reflecting "the recovery in production, lower prices compared to recent years, and sluggish export demand, all of which support domestic corn usage," analysts said.

Market participants expect a potential US-China trade war to support outflows of corn to Beijing, which approved Argentinian supplies in May.

"Now that the (US) elections are over and with a potential slowdown in China's agricultural imports on the horizon, there may be an opportunity for Argentina to increase its grain exports to China," Guido D'Angelo, senior economist at the Rosario Board of Trade, said

"However, potential production challenges in the Black Sea region and the US could reduce global exportable supply, while the already adverse production context in the Black Sea region, coupled with an escalation of the conflict between Russia and Ukraine, may exert potential upward pressure on prices," D'Angelo continued, adding that the US-China trade conflict will also be a key factor in analyzing international prices for the upcoming harvest.

Furthermore, "overproduction" from South America, added to a big harvest in the US, can potentially put downward pressure on prices, Javier Preciado Patiño, agronomist and former undersecretary of agricultural markets at Argentina's Ministry of Agriculture said.

"This year, the farming sector lived flat grain prices, and only by higher yields in the 2024-25 campaign, can Argentine farmers reach a positive result," Patiño said. "Fortunately, rains at the beginning of the season created a basis for achieving good yields."