Author: Grant Gardner

Searching for “Trump” and “grain market volatility” on Google will yield numerous results. While much of a grain marketer’s attention is paid to weather, production forecasts, seasonal trends, and supply and demand fundamentals, the “on-again, off-again” nature of tariffs under the current administration has added to an already volatile price environment. Instead of analyzing how tariff announcements have affected grain price volatility, this article takes an alternative approach, highlighting the major US grain-buying countries to better prepare producers for market impacts as tariffs are implemented.

The danger that tariffs pose to US agricultural commodity prices is typically linked to retaliatory tariffs or those enacted in response to US tariffs. On April 2nd, the Trump Administration announced “reciprocal tariffs” affecting nearly 90 nations. New tariffs have been added to the existing tariffs on Canada, Mexico, China, and the European Union. Tariffed countries now account for more than 77% of US corn exports, 76% of soybean exports, and 57% of wheat exports (averaged from 2020 to 2024, as shown in Figures 1, 2, and 3). While approximately 15% of US corn, 40% of US soybean, and 45% of US wheat production is exported, China accounts for 17% of corn, 53% of soybean, and 8% of wheat exports. China already announced retaliatory tariffs, which, in combination with the new Trump administration tariffs, coincided with a decline of over $0.50/bu in November 2025 soybean futures over the two days following the announcement. 

As retaliatory tariffs take effect, US agricultural commodities become more expensive, reducing exports and increasing ending stocks, which subsequently lowers prices. While nations may not completely halt their purchases of US crops, they are likely to redirect demand toward competing suppliers, such as Brazil, Argentina, and the Black Sea region, if net prices (commodity price + tariffs) are lower.

Regardless of political perspective, tariffs disrupt free trade and undermine comparative advantages and efficiency. For instance, the US has a comparative advantage over most countries in corn and soybean production. When retaliatory tariffs are imposed, the demand for efficiently produced US goods, such as corn and soybeans, decreases, pushing prices down. Conversely, retaliatory tariffs restrict access to efficiently produced goods from other countries, such as fertilizers, resulting in higher prices. Traditional market indicators, such as supply and demand and exchange rates, continue to influence prices. Meanwhile, tariff-induced volatility has likely been exacerbated by artificial intelligence, which can extract insights from written and spoken media while simultaneously executing trades. Although it is nearly impossible for producers to react at the same speed, the announcement of US tariffs or foreign retaliatory tariffs may signal a need for price risk management, as the effects of new tariffs are likely bearish in the short term. 

Figure 1: Average US Corn Exports by Destination (2020-2024)

Figure 2: Average US Soybean Exports by Destination (2020-2024)  

Figure 3: Average US Wheat Exports by Destination (2020-2024)

Gardner, Grant. “Major Players in US Trade and Grain Market Volatility.” Southern Ag Today 5(15.3). April 9, 2025. Permalink

The October 16, 2024, edition of Southern Ag Today indicated a slightly bullish wheat situation within the United States (Welch, 2024). Today’s article discusses this further using three charts: U.S. Wheat Imports by Country, Wheat Production by Country, and Ending Stocks by Country. Wheat is a global crop, with the U.S. accounting for just 7% of the world’s wheat supply (Welch, 2024). Thus, U.S. fundamentals may not be the best indicator of a bullish outlook. Generally, the U.S. has a few uses for wheat, including food, seed, feed, and exports. Year over year, we see similar quantities of wheat used for food, seed, and feed. Significant changes in demand, which could result in a bullish outlook, typically occur due to changes in exports. 

                  Figure 1 illustrates U.S. wheat imports by country. In general, Mexico is the largest importer of U.S. wheat. China is a vast producer – typically keeping most of its production for domestic use – but it is also a significant importer. In 2023, China imported more wheat than usual due to quality deterioration. This situation is unlikely to occur again in 2024, as China is projected to have above-average production (Figure 2) and standard quality. However, the U.S. could see a price increase due to smaller production and ending stocks in the European Union (Figures 2 and 3). The E.U. has had a bad year of production with low quality in crucial wheat producing countries, including Germany and France. Consequently, E.U. stocks are projected to be the lowest since 2000. French wheat, similar to U.S. soft red winter, is used for food products like cakes, cookies, and pastries, requiring lower-protein wheat. German wheat is similar to U.S. hard wheats, including hard red winter wheat, and it is often used for bread and pizza dough.  

                  The low stocks and production situation could cause the E.U. to limit their exports, opening opportunities for more U.S. exports to countries that typically buy wheat from the European Union.  It could also result in more direct U.S. exports into the E.U., boosting U.S. wheat price. A series of U.S. sales to the E.U. could indicate bullish action in the wheat market and be a crucial indicator to sell this marketing year. 

Figure 1: U.S. Wheat Imports by Country

Figure 2: Wheat Production by Country

Figure 3: Ending Stocks by Country

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Sources:

U.S. Department of Agriculture. (2024). Production, Supply, and Distribution database. Foreign Agricultural Service. https://www.fas.usda.gov/data/psd-online

Welch, J. Mark. “Recap of the October WASDE for Grains and Soybeans.” Southern Ag Today 4(42.3). October 16, 2024. Permalink

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Gardner, Grant, and Frayne Olson. “Global Wheat Shortfalls Could Signal Bullish Potential for U.S. Wheat.“ Southern Ag Today 4(44.3). October 30, 2024. Permalink

The September World Agricultural Supply and Demand Estimates (WASDE) report indicates modest changes in supply and demand for corn and soybeans. The World Agricultural Outlook Board (WAOB) increased their estimated corn yield by 0.5 bushels per acre, offset by a decrease in carryover from the 2023 marketing year. Soybean demand also saw a slight increase of 2 million bushels. Both cotton and rice yields were cut; however, the lower yield expectations were offset by lower demand, resulting in no change to the projected season-average price.

The remainder of this article focuses on corn and soybeans, which exceed trend yields by 2.6 and 1.2 bushels and represent a national high. Record yield expectations are driving stocks-to-use ratios (a key indicator of surplus) to levels much higher than in recent years. Consequently, the USDA has projected the marketing year average price for corn to be around $4.10 per bushel, while soybeans are expected to average $10.80 per bushel.

Currently, domestic consumption and exports of corn and soybeans appear to be stable. Crush (processing) and ethanol production are at or near record highs, while export demand is lower, but somewhat steady. Without a significant change in the yield estimate due to drought or overestimation, it is hard to envision a sharp price rise for the 2024/25 marketing year.

Figure 1 graphs stocks-to-use ratios and CPI- (inflation) adjusted season average prices for corn and soybeans with the September WASDE Estimates and associated trendlines (green and yellow with gray confidence intervals). CPI-adjusted corn prices are at their lowest level since at least 2011, and soybeans are nearing the lows seen in 2019. As a result, 2024 may be one of the toughest years for grain producers in the past decade, given the absence of a major event that could drive substantial price increases.

Figure 1: CPI Adjusted Price and Stocks to Use Ratio for Corn and Soybeans

Sources:

U.S. Department of Agriculture, World Agricultural Outlook Board. (2024, September 13). World Agricultural Supply and Demand Estimates (WASDE). https://www.usda.gov/oce/commodity/wasde

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Gardner, Grant. “Minimal Price Gains Amid Record Yields: A Tough Outlook for Grain Producers in 2024.” Southern Ag Today 4(38.3). September 18, 2024. Permalink

USDA’s June Grain Stocks report estimated 37% more corn and 44% more soybeans stored on-farm than last year (Maples, 2024). Many producers are still sitting on unpriced old crop corn trying to decide whether to sell or hold through harvest hoping for prices to improve. This article discusses three potential options for a farmer deciding what to do with old crop held in storage. The three options – using 100,000 bushels of corn and a current cash price of $4.00 – examined are:

1. sell corn at the current market price;
2. continue to store corn with operating loan utilization; or
3. store corn with cash resources.

Selling corn at the market price is the most straightforward option. Selling would result in collecting $400,000 that could be used in other areas of the operation – including paying down opertating debt or covering expenses – or it could be invested. Additionally, making sales would free up storage for the new crop and shift the focus to marketing the 2024 crop.

If an operating loan with a 9% interest rate is being used, continuing to store corn until February would incurr interest expense of $21,000 ($400,000 × 9% × 7/12). Dividing by 100,000 bushels, the per-bushel interest expense would be $0.21 or $0.03 per bushel per month, meaning cash prices from now until February would need to increase to at least $4.21 for the farmer to be better off than selling at today’s prices. 

If the farmer is using cash reserves, rather than an operating loan, to carry corn until February, forgone interest should be estimated. Current certificate of deposit (CD) rates for short term money are close to 4.5%. Utilizing $400,000 cash has a forgone return on investment interest of  $10,500 ($400,000 × 4.5% × 7/12) or $0.11/bu ($0.015 per bu per month). 

When deciding to continue to store corn or sell, several factors need to be considered. Calculating the interest expense or forgone interest is one factor. There is uncertainty in price direction; however, based on current projections it is likely that both futures prices and basis will remain low as harvest proceeds. It is worth noting that this analysis only considers interest expenses. It does not include other other storage costs or risks, such as quality losses, grain handling, and capital recovery for storage infastructure. Additionally, prices may not increase by February, and all storage could result in a loss. 

References

Maples, William E. “Having a Way Out.” Southern Ag Today 4(30.1). July 22, 2024. Permalink

Gardner, Grant. “Interest Rates and Grain Storage.” Southern Ag Today 3(26.1). June 26, 2023. Permalink

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Gardner, Grant. “To Store or Not to Store? Old Crop Exit Strategies.” Southern Ag Today 4(35.1). August 26, 2024. Permalink

U.S. exports can be a key driver for commodity prices. U.S. production of corn, soybean, and wheat exceeds domestic use, making access to export markets crucial. Data from 2018/19 to 2022/23 shows that corn, soybean, and wheat exports are dominated by a few key countries. For corn, the United States, Brazil, Argentina, and Ukraine constitute 85% of global exports (Figure 1). For soybeans, Brazil is the largest exporter followed by the United States and Argentina; together, the three countries account for 90% of soybean exports (Figure 2) and 84% of soybean meal exports. Wheat exporting countries are more diversified, with the United States, Russia, the EU, Canada, Australia, Ukraine, and Argentina making up 84% of the market (Figure 3).

In 2022/23 Brazil overtook the United States in corn exports and is expected to remain the largest export competitor to the United States. In the 2022/23 marketing year, Brazilian soybean exports nearly doubled those of the United States, and Brazil is projected to maintain its role as the worlds largest exporter of soybeans. In 2023/24, Brazilian exports are estimated at 50 million metric tons (MMT) of corn and 102 MMT of soybeans. Brazilian export projections for 2024/25 are at 49 MMT of corn and105 MMT of soybeans. In comparison, the United States is estimated to export slightly more corn at 55 MMT and 46 MMT of soybeans in 2023/24. 2024/25 U.S. export projections are at 56 MMT of corn and 50 MMT of soybeans. Wheat export patterns have remained relatively stable, despite geopolitical conflicts affecting some regions. The largest question for 2024/25 wheat exports pertains to Russia, which is experiencing weather-driven yield and quality issues in addition to the war with Ukraine.

Export data is vital for commodity marketing. Weekly, the USDA Foreign Agricultural Service reports sales transactions entered into with a buyer outside the United States. In addition to the weekly reporting requirements, daily reports to USDA FAS are required for any export sales activity of quantities totaling 100,000 metric tons or more of one commodity sold in one day to one destination or 200,000 metric tons or more of one commodity sold to one destination during any reporting week. Positive U.S. export bookings support domestic commodity prices. If exports exceed projections or expectations, prices will typically rise, offering a potential opportunity for producer sales. 

Weather events in other major exporting countries, particularly in South America, can signal support for prices and provide opportunities for increased U.S. commodity sales, especially for corn and soybeans. Wheat can be less sensitive to weather as wheat is produced on six continents in both hemispheres, so production is spread throughout the calendar year. Wheat can be strongly influenced by geopolitical and weather events, making it harder to predict specific timing for market changes. 

Exchange rates can also affect exports. The strengthening of the USD, relative to the export competitor’s currency, can make U.S. exports relatively more expensive to an importer. A weakening USD makes U.S. exports more competitive.

The competitiveness and small number of countries in export markets, particularly Brazil and Argentina in corn and soybeans, along with the past relative stability in wheat exports underscores the importance of monitoring both export trends and external factors to optimize commodity marketing strategies.

Figure 1: World Corn Exports by Country, 2018/19-2022/23 Marketing Years Average (%)

Figure 2: Soybean Exports by Country, 2018/19-2022/23 Marketing Year Average (%)

Figure 3: World Wheat Exports by Country, 2018/19-2022/23 Marketing Year Average (%)

References

USDA Foreign Agricultural Service. Production, Supply and Distribution.https://apps.fas.usda.gov/psdonline/app/index.html#/app/advQuery.

USDA Foreign Agricultural Service. Export Sales Reporting Program. https://fas.usda.gov/programs/export-sales-reporting-program and https://apps.fas.usda.gov/export-sales/esrd1.html.

Gardner, Grant. “Ag Export Percentages: A Focus on Corn, Soybeans, and Wheat.” Southern Ag Today 4(24.1). June 10, 2024. Permalink