Strategic Farming: Let’s talk crops! focused on grain markets

With recent softening in the grain markets, what is the outlook for 2024? Dr. Frayne Olson, Crop economist and marketing specialist from North Dakota State University, expects the Jan. 12 USDA reports to set a reference point for the markets going forward. Crop inventories, consumption and South American crops will all play roles in 2024.

Increased acreage led to a record corn crop in 2023. Although demand has been relatively strong, ending stocks and the stocks-to-use ratio are relatively high. Average prices tend to be lower and more stable when the ratio is high because the inventory acts as a buffer.

Corn consumption is key. The livestock sector consumes the most corn and demand is relatively stable. Ethanol production is second in corn use and these numbers don’t vary much, according to the Department of Energy’s weekly tracking.

“If there’s a shock to the system,” Dr. Olson explains, “it will likely come from the export market.” While the U.S. has many regular grain customers, China has been very volatile. After being one of the top importers of U.S. corn, Chinese demand dropped significantly when they purchased from Brazil instead.

Despite this volatility, Japan is increasing its import volume. While export volume is trending higher, the U.S. does have competition. After leading corn exports for decades, Brazil has taken that number one spot.

The South American crop is also key. After drought in Argentina, weather and yield outlooks are more favorable. Brazil is the larger exporter, producing two crops of corn and one of soybeans.

In the south, first crop corn and soybeans are grown simultaneously. After early drought, weather conditions are more normal conditions and exportable stocks are expected. With corn harvest in March and April, southern Brazil generally competes with us during our summer months. The larger, second corn crop –called sefrinha – is grown further north and is planted after the soybean crop, typically during January and February.

Yields of Brazil’s current soybean crop are starting to stabilize after early drought damage. The exception may be part of the northern region where yields have been reduced. If problems continue, soybean buyers may shift to the U.S. to cover their positions.

Compared to corn, ending stocks for soybeans have been relatively tight. Lower than expected soybean acreage and production offset a decrease in exports to keep stocks low. “Even though prices have softened over the past weeks,” says Dr. Olson, “we’re still at the higher level of the price spectrum long term.”

The crushing industry is the top consumer of soybeans as capacity has increased steadily over ten years. Plant expansions, particularly in the northern plains, have been driven by demand for renewable biodiesel. As a result, soybean demand is stable over time.

Export markets for soybeans are also volatile, with exports and export volumes on a steady downward trend. While China is, by far, our number one customer, export volume is well behind last year’s numbers. Brazil captured the export market into China with a massive crop for a longer period of time, extending sales into our harvest-to-January export window.

Ending stocks for all wheat is comfortable. Domestic milling demand is relatively stable, but like other crops, the export market has been volatile. Russia has produced large crops, especially winter wheat, that are competitive. Since agricultural products are not included in the sanctions, grain export has not been hindered. Spring wheat inventories are adequate and exports are better than expected, due to increased sales to Mexico. The Philippines continue to be a very stable, big buyer. A steady export pace should help the struggling market. 

Olson suggests that reasons for nervousness might be changing. The USDA reports usually hit a reset button on people’s perspectives. Given lower price levels, he expects to see some increase in export volumes. Finally, markets will be engaged as the South American crops progress.

For more information from University of Minnesota Extension, visit