Grain Markets Shift Focus To Demand, South America

August was a bit of a whirlwind between public agencies and private groups taking a stab at projecting U.S. crop estimates for the current growing season. With the August WASDE report and Pro Farmer Crop Tour in the rearview mirror, market attention is shifting from U.S. weather toward domestic demand and South America’s upcoming crop season.

This year's corn crop will be large, even with reports of disease or a lack of rain. The USDA may come down on its record yield forecast, but taking away a handful of bushels could keep the national average above trendline by the end of harvest. An increase in corn acres could also offset a decline in yields. 

The soybean production forecast has been drawing less attention than corn. The USDA forecasts yields at a record 53 bushels per acre, but planted acres are expected to be seven percent lower than a year ago. Total production will be about average. 

But there is still uncertainty about how this season could shape up for corn production. 

Strong U.S. Corn Demand

What do we know? U.S. corn demand is strong.

U.S. corn exports for the 2024/25 marketing year remain 28 percent above last season at 2.58 billion bushels. Outstanding sales for the upcoming marketing year are running at the best pace since the 2021/22 season, when China was a major buyer during the Phase 1 trade agreement. Besides Chinese purchases, 2025/26 sales are running at a record pace. 

Exports have benefited from strong growth in shipments to Mexico, South Korea, Japan, and Colombia. According to data from the U.S. Census Bureau, exports to the rest of the world are up about 35 percent year-over-year. 

Ethanol has also been a bright spot this season to complement lower prices. Corn crushed for ethanol has been steady year-over-year due to better processing efficiency. Crush is still holding near a record despite lower volumes. 

Soybean Demand Uncertain

The lack of U.S. soybean purchases by China is concerning, with zero new crop sales on the books for the upcoming season. It’s likely China will buy U.S. soybeans, but the longer they hold off from their typical buying window, the more likely those volumes will be much lower than in previous years. 

New crop soybean sales are running at the slowest pace since the 2019/20 marketing year. It wasn’t too long ago that sales were the slowest in about 20 years before other buyers stepped in to lift commitments. 

In theory, Brazil grows enough soybeans to cover all of China’s imports, but seasonality is a limiting factor. Brazilian farmers harvest soybeans between January and July. Meanwhile, U.S. soybeans are harvested in September through October, meaning U.S. supplies are generally plentiful when Brazilian supplies are more scarce and expensive. Purchases outside of China have fared well, with new crop sales running at the fastest pace since the 2018/19 marketing year.

U.S. soybean crush has helped buffer declining export demand. Domestic processing is nearly five percent higher than a year ago, driven by strong demand for feedstocks in biofuel production. But the prospect of increasing global supplies continues to boost global competition. 

Brazil’s Goliath Crop

According to Brazil’s National Supply Company (Conab), Brazilian farmers are expected to harvest 345.2 million metric tons (MMT) of grain this season, 47.7 MMT higher than the 2023/24 season and the largest volume recorded for the country. Brazilian farmers harvested a record 170 MMT of soybeans during the current 2024/25 season, up 15 percent from the previous season, according to Conab in August. 

Early estimates suggest that it could get larger during the upcoming season. The USDA forecasts production to increase by another 3.5 percent in 2025/26. That suggests a one percent increase in acreage, assuming an average yield in the country. There is still room for farmers to expand crop area when converted from pastureland, something Brazil’s current agriculture ministry has alluded to in the past. 

Conab projects 2024/25 corn production at a record 137 MMT due to higher-than-expected yields. The second-season corn harvest, 83.7 percent complete, is expected to reach 109.6 MMT alone. 

The USDA doesn’t project another record corn harvest out of Brazil in the 2025/26 season. But total crop acreage and production could continue to increase thanks to credit available through the Brazilian government’s Harvest Plan. Long-range forecasts are pointing toward near to above-normal precipitation for Brazil with La Niña dominance emerging. An early start to the monsoon season will likely encourage increased crop acreage.

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