Market Commentary for 9/19/25
Last week I noted that the national corn yield estimates were still inconclusive based on early harvest reports. After another week of results, there’s still no clear indication of what the national yield will be. While supply remains uncertain, attention should probably also focus on the demand side. The USDA is projecting record corn production for 2025 but also record demand.
Ethanol Demand
According to USDA data, next year’s ethanol demand is estimated to match the highest production ever produced.
Low-priced corn should keep ethanol production profitable.If overseas demand remains strong, then the USDA’s forecast is probably attainable.
Export Demand
US corn exports set a record last year, and the USDA is projecting another record this year.
Lower prices are helpful in gaining market share.Add to that a decrease in world corn stocks, and another record year for exports seems possible.
My only concern with export potential is that the 3 largest corn producers (Brazil, China, and the US) are all expected to have record crops.Plus, Argentina and Ukraine will likely have nearly average sized crops.This means the 5 main countries that produce and/or export corn will have a lot of supply, which could make competition for US corn difficult if prices rally, and make current USDA estimates unachievable.
Feed Demand
The USDA is forecasting a 7.5% increase in feed demand over last year, or an additional 425 million bushels used in animal feed.
This seems difficult to achieve, given that animals on feed are up only 1% from last year.Some market participants will say cheaper corn leads to more demand and other products will be displaced in the feed channels.
But that raises the question, where will these displaced feed alternatives go?They’ve lost value too and still compete in rations.Plus, if this reasoning is correct, then why didn’t feed demand increase last year from the previous year when prices were some of the lowest seen in several years?
Old Crop
I think it’s possible that last year’s national corn crop yield was underestimated.Corn basis values throughout the US have been very low leading up to harvest.For a crop that is supposed to have one of the tightest carryout in the last 10 years something doesn’t feel right about the cash markets for corn.
There is a chance the quarterly stocks report on September 30th could show more corn left in bins than the market believes.If that happens, carryout could increase for the 2025 crop marketing year.
However, I suspect the more likely outcome will be that if the USDA does need to make an old crop stocks change, they will “kick the can down the road” to the January report when they can adjust both stocks and the finalized 2025 corn yield and new crop demand all at once.
Sorghum
I am also skeptical of the USDA’s forecast of 225 million sorghum export bushels, which is 10 million below where it was 2 years ago and 130 million more than last year.With China being the main buyer of sorghum the last few years, it’s possible the export target for sorghum won’t get hit unless there is some kind of trade deal put in place.If the crop isn’t exported, it will displace corn in feed and ethanol rations to get rid of it.That could mean at least another 100 million corn demand bushels lost.
Bottomline
As I suggested last week, the market could be trading a yield under 183, versus the USDA”s September 12th estimate of 186.7.If the yield drops to 180, it would mean a 650 million bushel drop in production.
But the USDA rarely cuts production without also reducing a significant portion of that value in demand somewhere in the equation.Feed demand had a sudden increase of 425 million bushels from last year, and sorghum may have another 100 million bushels that will need to find a feed home.That means carryout might only decrease from the current 2.1 billion to somewhere still above 1.9 billion bushels which is considerably higher this previous crop years 1.3 billion bushel carryout assuming no adjustments need to be made to old crop.
At 1.9 billion bushels of carryout, corn may not be able to sustain a rally without some kind of surprise.
For questions—or to receive marketing content like this directly—connect with Jon at jon@schevegrain.com or schevegrain.com.
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