Nearby Corn Futures Have Risen Dramatically Since The Harvest Low
Nearby corn futures have risen dramatically since the harvest low of $3.85 on August 26th, closing January 17th at $4.84. Moving forward there are five key factors that will determine if corn futures prices continue to strengthen or pull back.
- 1) Exports. USDA estimates 2024/25 marketing year corn exports at 2.45 billion bushels, up 158 million compared to last year. The current export sales pace indicates that upward revisions to USDA’s corn export estimates may be required. The current export sales pace exceeded last year and the five-year average. One factor that could hinder exports is the strong US dollar. Since October 1st the USD index has increased 8.1%. All else equal a higher USD makes U.S. exports more expensive to foreign countries.
- 2) Additional reductions to U.S. supply estimates. It seems unlikely that additional revisions to 2024 U.S. production estimates will occur. The January USDA WASDE report was a shocker, decreasing U.S. average yield by 3.8 bu/acre and production by 276 million bushels compared to the previous month. Usually, the January WASDE report is close to the final USDA estimates.
- 3) South American production. South American production will impact soybeans more than corn in the next 1-2 months. However, delays in Brazil’s second crop corn planting (following soybean harvest) or dry weather in Argentina and Brazil could result in decreased production estimates and further reliance on U.S. supplies.
- 4) U.S. planted acreage. Corn planted acreage will have a greater influence on new crop prices, however increased acreage could take the top off the old crop corn market. Currently, the futures market has a price bias towards new crop corn over soybeans, wheat, and cotton. The November soybean-to-December corn futures price ratio is 2.25, which favors corn plantings over soybeans. An increase in planted acreage of 2-4 million acres could be the result.
- 5) Trade policy and tariffs/retaliatory tariffs. Tariffs and trade policy are wild cards. If the incoming administration imposes tariffs on foreign products, it is very likely that agricultural commodities will receive retaliatory tariffs which would decrease U.S. prices for farmers. If additional purchases of agricultural commodities, particularly from China, are negotiated, it could be a windfall for agricultural prices. The direction is highly uncertain, but trade policy and tariffs could move prices substantially in either direction.
I don’t know where corn futures prices are heading with certainty but a reasonable projection for nearby corn futures price range is $4.50 to $5.10, with a potential expansion of the trading range to $4.30 to $5.65 based on how the above five factors evolve.
Corn
Across Tennessee, average corn basis (cash price-nearby futures price) strengthened or remained unchanged at West, North- west, West-Central, and Mississippi River elevators and barge points and weakened at North-Central elevators and barge points. Overall, basis for the week ranged from 20 under to 23 over, with an average of 9 over the March futures at elevators and barge points. Ethanol production for the week ending January 10 was 1.095 million barrels per day, down 7,000 from the previous week. Ethanol stocks were 25.008 million barrels, up 0.860 million barrels compared to last week. Corn net sales reported by exporters for January 3-9 were net sales of 40.3 million bushels for the 2024/25 marketing year and 0.007 million for the 2025/26 marketing year. Exports for the same period were up 72% compared to last week at 58.4 million bushels – a marketing year high. Corn export sales and commitments were 65% of the USDA estimated total annual exports for the 2024/25 marketing year (September 1 to August 31) compared to the previous 5-year average of 61%. Cash prices ranged from $4.40 to $5.08 at elevators and barge points. March 2025 corn futures closed at $4.84, up 14 cents since last Friday. For the week, March 2025 corn futures traded between $4.69 and $4.85. May 2025 corn futures closed at $4.93, up 14 cents since last Friday.
Mar/May and Mar/Dec future spreads were 9 and -28 cents. December 2025 corn futures closed at $4.56, up 6 cents since last Friday. Downside price protection could be obtained by purchasing a $4.60 December 2025 Put Option costing 41 cents establishing a $4.19 futures floor.
Soybeans
Across Tennessee the average soybean basis strengthened or remained unchanged at Northwest, West, and West-Central elevators and barge points and weakened at North-Central and Mississippi River elevators and barge points. Basis ranged from 25 under to 40 over the March futures contract, with an average basis at the end of the week of 11 over. Soybean net weekly sales reported by exporters were net sales of 20.9 million bushels for the 2024/25 marketing year. Exports for the same period were down 7% compared to last week at 54.2 million bushels. Soybean export sales and commitments were 82% of the USDA estimated total annual exports for the 2024/25 marketing year (September 1 to August 31), compared to the previous 5-year average of 81%. Cash soybean prices at elevators and barge points ranged from $9.83 to $10.83. March 2025 soybean futures closed at $10.34, up 9 cents since last Friday. For the week, March 2025 soybean futures traded between $10.18 and $10.64. March soybean-to-corn price ratio was 2.16 at the end of the week. May 2025 soybean futures closed at $10.44, up 6 cents since last Friday.
Mar/May and Mar/Nov future spreads were 10 and -7 cents. November 2025 soybean futures closed at $10.27, down 4 cents since last Friday. Downside price protection could be achieved by purchasing a $10.40 November 2025 Put Option which would cost 68 cents and set a $9.72 futures floor. Nov/Dec 2025 soybean-to-corn price ratio was 2.25 at the end of the week.
Cotton
North Delta upland cotton spot price quotes for January 16 were 64.23 cents/lb (41-4-34) and 66.23 cents/lb (31-3-35). Adjust- ed World Price (AWP) decreased 0.68 cents to 53.98 cents. Cotton net weekly sales reported by exporters were net sales of 316,200 bales for the 2024/25 marketing year and 1,300 bales for the 2025/26 marketing year. Exports for the same period were up 17% compared to last week at 224,800 bales. Upland cotton export sales were 78% of the USDA estimated total annual exports for the 2024/25 marketing year (August 1 to July 31), compared to the previous 5-year average of 82%. March 2025 cotton futures closed at 67.6 cents, up 0.59 cents since last Friday. For the week, March 2025 cotton futures traded between 66.6 and 67.98 cents. May 2025 cotton futures closed at 68.63 cents, up 0.37 cents since last Friday.
Mar/May and Mar/Dec cotton futures spreads were 1.03 cents and 1.52 cents. December 2025 cotton futures closed at 69.12 cents, up 0.26 cents since last Friday. Downside price protection could be obtained by purchasing a 70 cent December 2025 Put Option costing 5.03 cents establishing a 64.97 cent futures floor.
Wheat
Wheat net weekly sales reported by exporters were net sales of 18.9 million bushels for the 2024/25 marketing year and 0.3 million bushels for the 2025/26 marketing year. Exports for the same period were down 53% compared to last week at 7.2 million bushels. Wheat export sales were 77% of the USDA estimated total annual exports for the 2024/25 marketing year (June 1 to May 31), compared to the previous 5-year average of 85%. Wheat cash prices at elevators and barge points ranged from $4.97 to $5.32. March 2025 wheat futures closed at $5.38, up 8 cents since last Friday. The March wheat-to-corn price ratio was 1.11. March 2025 wheat futures traded between $5.28 and $5.52 this week. May 2025 wheat futures closed at $5.50, up 7 cents since last Friday.
Mar/May and Mar/Jul future spreads were 12 and 22 cents. July cash contracts at elevators and barge points ranged from $5.14 to $5.49. July 2025 wheat futures closed at $5.60, up 6 cents since last Friday. Downside price protection could be obtained by purchasing a $5.70 July 2025 Put Option costing 48 cents establishing a $5.22 futures floor. ∆
DR. AARON SMITH: University of Tennessee