SCOTTSDALE, ARIZ. —As US growers prepare to plant the 2025 corn crop, the market faces many unknowns. Among them are widely varying South American yields and production, crop issues in Europe and the Black Sea region, and demand concerns linked to highly pathogenic avian influenza (HPAI), the make America healthy again movement and the Trump administration’s reduced enthusiasm for biofuels.

Those factors challenge US and global markets with tight stocks, said Mark Talaski with Advance Trading Inc. in his corn milling outlook presented March 9 at the North American Millers’ Association spring conference.

“We have a lot more questions than we have answers today,” Talaski said. “We’ve seen a pretty good uptick since the first of the year in the flow of index funds, or managed money. With all the tariff chatter, we’ve seen a lot of pullback from managed money. A lot of uncertainty, a lot of risk taken off the table. They have aggressively sold off some of their positions, but they had a near-record long position for this time of year.

“We’re at an interesting spot. It felt like we were a little toppy, and this market needed to pull back from that perspective, and we’re seeing that recently.”

Following the harvest of soybean crops in Argentina and Brazil, and the latter’s first corn crop, the focus is now on seeding Brazil’s second corn crop, safrinha, which represents about 75% of its corn production. Planting in the key Mato Grasso region is back on track after some initial setbacks from wet weather that saw about 20% planted in less-than-ideal conditions. The delay pushed back the growing season for that crop and increased the stress potential for the crop as it nears harvest in late June or July.

Where South American corn production falls will be highly dependent on weather, another unknown factor in the market until late June or early July, Talaski said.

“One of our private consultants suggests that the total corn crop in South America right now is 176.5 million tonnes, which is pretty much where it was a year ago,” he said. “Where this gets different is we’re off from the USDA by about 6.8 million tonnes. Translated into bus, it’s about a 268-million-bushel difference. It matters, but maybe it is not that big of a story. “

Talaski outlined South America’s importance to the global grain picture following massive growth in the past 10 years.

“What’s interesting is while South American acres and production have gone up, US corn acres have held steady,” he said. “When you look at yield variation in South America, it’s not nearly as steady as the US. Since 2014, the US is essentially up 5% in yield while South America, at the end of the day, has very similar yield to us, but they’ve had wide variation in that. Weather is a much bigger factor in that region. Production varies with yield. Brazil production is up about 48%, Argentina up 54% and the US up 5%. The wide variation is interesting, and that is why the market is focused on this safrinha crop.”

Talaski charted the USDA’s 10-year outlook for corn exports and found the Department sharply underestimated Brazilian and Argentine corn exports but projected US exports close to the current estimate for 2024-25.

“That matters because the US, Brazil and Argentina are major exporters globally,” he said. “The US (accounts for) about 33% of exports, Brazil about 25% and Argentina about 19%. South America matters because they’re the world exporter in the second half of the crop year. The US gets the September-to-March-or-April window, while South America gets the second half.”

Talaski said increased corn production, which has doubled since 2000 along with consumption, is necessary.

“We need it,” he said. “We’ve become much more of an inelastic industry. The growth is happening in both the feed sector and the food, seed, and industrial use sector. We continue to see usage, ethanol being a big art of that since the turn of the century.”

With China — “a wild card” in terms of secrecy and the lack of corn exports — off the table, the stocks-to-use ratios have tightened considerably in both the US and world corn markets, he said.

“It’s extremely tight,” Talaski said. “Three percent, down from 70% a year ago. Does that mean we’re running out of corn? No, it’s just tight. That’s why it’s very sensitive to what’s going on in South America right now in production. There are issues in Europe, issues in the Black Sea region. These have challenged the world supply, so the US and South America are very much feeding the world when it comes to corn for a minute. Why did the market get a little excited the past two months? Because the USDA changed the yield on corn in the January report, and that got the market sensitive because we’re exporting a lot of corn.”

Tariffs could throw a wrench into corn exports to North American trading partners, he said. Mexico depends heavily on the US for corn.

“Mexico can import corn from other countries, but it’s just harder,” Talaski said. “Moving corn from Nebraska to Mexico is super efficient on the railroad, so it’s hard for them to pull away. They have a big need, and they’ve been a very big importer of US corn. There are 700 million bus on the books for this year versus the previous five-year average at 518 million bus. But it’s not just them. Europe had a crop issue, so the US had Spain buying a lot of corn. The Black Sea region doesn’t have the crop that they might otherwise have had. There are some logistical issues. We’re selling corn into Europe, and there is some Far East demand. But Mexico is a big buyer of US corn, and they likely (will) continue to do that, but again, we have tariffs in place, so it’s a very unsure situation.”

In the 20 years since a renewable fuel standard was put into place, corn for ethanol has stabilized, Talaski said. The current growth potential areas are aviation fuel and sustainable diesel. Those industries have many questions related to the second Trump administration’s relative lack of enthusiasm for biofuels compared with the Biden administration.

“It doesn’t seem like (the current administration) wants to subsidize money in that space, so it feels like a pullback,” he said. “Two years ago, that was the boom. It doesn’t seem like they’re economically ready. Airlines say it’s too expensive. Corn ethanol margins have been pretty good here in the US recently, but that’s more regional. The West has not been great. The East-Central region has been better, partly on the strong export program. Ethanol exports to Canada, where the population is more to the east, have been strong. Mexico and Canada account for 40% of US ethanol exports.”

US political winds also may play a role in the relatively small segment of high-fructose corn syrup as it relates to the make America healthy again initiative, Talaski said.

“A lot of people in that space were saying, ‘Whoa, wait a minute. We’re going to take soda off the table? We’re going to take all these things away? What’s that mean to our demand?’” Talaski said. “HFCS is about 400 million bus of corn we use annually. I don’t think that will go to zero, but it could be cut. We have a lot of other countries we sell it to, so I suspect we’ll see a lot of that still flowing. It’s something to watch as we look at our corn demand: where is one piece that could go down in the next couple years?”

Analysts with Advance Trading suspect the USDA’s feed use of corn projection may be too high.

“There’s a couple reasons why,” Talaski said. “We’ll learn more in the USDA March 1 stocks report and another in June, but it feels overstated. Soybean meal in relation to corn is cheap. A lot of your feed rations are probably utilizing the cheapest solution, which is soybean meal as a percentage. We’re seeing poultry guys leaning a little more into soymeal in rations, taking some corn out.”

The corn-wheat spread will continue to be closely watched, he said.

“Wheat’s been trying to find a friend in the demand side. Obviously, our domestic wheat demand, but we also have this feed side, and I think we have a pretty good crop developing in the hard red winter wheat states today. There’s a long way to go till harvest, so the jury’s still out. But with corn and wheat becoming a tighter number, it’s giving ranchers an incentive to feed more wheat in their rations.

On the demand side of the equation, regional issues related to poultry and HPAI will play a role, Talaski said.

“The big bull’s-eye this year seems to be on eastern Indiana and western Ohio versus last year Michigan had a big hit,” he said. “But it’s impacting the layers. The reality is we just can’t turn layers back into the marker quick enough. A broiler, six weeks. Can’t do that with the layer side. Takes a lot longer. The good news is we’re in March, so hopefully this slows or even comes to an end. It won’t necessarily cut the corn demand significantly. It’s going to be more regional. Some areas could mean 5 to 15 million bus that could go to feed might have to find somewhere else to go.”

Ultimately, Talaski and Advance Trading have pegged 2025 US corn planted acres at 94.2 million versus the USDA’s 94 million. The firm projects about 17.5 billion bus in total supply usage at 15.2 billion bus and carryout rising to 2.3 billion bus.

“We see a strong export program of old-crop corn,” he said. “New-crop corn, the jury is still out. If South America, particularly Brazil, has a good crop, they’re probably going to take over that market for a bit and that could weigh on the US. If Europe and the Black Sea region see a decent crop, that changes the dynamic as well. The US becomes the residual backstop of the world when it comes to exports. Everybody will buy from everybody else before us. It feels like corn carryout is going to go up. Mother Nature’s obviously going to have the last say on that.”

The US Drought Monitor progression from the end of 2024 through February indicates parts of the US Corn Belt have been extremely dry, with 60% of US corn production areas in drought versus 32% a year ago.

“Does the Drought Monitor mean anything March 5? Probably not,” Talaski said. “Tell me what it looks like May 5, and that probably matters way more. Something to watch. But if you’re looking for uncertainty in the market, prices are probably going to go lower, but that assumes we actually can get this crop planted and don’t have an issue with weather, and it’s going to make for uncertainty in the trade.”

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