As producers prepare for the rest of the year, Troy Bocklemann, CattleFax director of protein and grain market analysis, put the markets into perspective.  

Today, there’s 1.76 billion bushels of corn stocks — record-high yield, despite smaller total acres. 

“As we went through the crop growing season, the USDA was increasing yield all the way through there. But we had a really dry fall, and that really dry fall had an effect on yield, but it was still record high,” Bocklemann said. 

To match those yields, demand is at an all-time high, too. 

“Not only did you have record-high demand domestically,” he reported, “but global demand outpaced global production as well by about a hundred million bushels.” 

As President Trump eliminated the electric vehicle mandate, Bocklemann predicts corn use in ethanol production will continue to stay strong. In terms of feed residual, there’s fewer cattle on feed compared to last year, but the industry is feeding out the cattle longer. Bocklemann also noted there’s more hogs and chickens this year. 

“So as a result, just ethanol or feed residual is fairly stable, but we have a stocks-to-use number in the current marketing year sitting here at 10.2%,” he said, describing it as right on the border of comfortable and tight. 

Looking towards this upcoming growing season, there’s a bigger emphasis on planting more corn acres compared to soybeans. Bocklemann said it’s all going to be driven by yield. 

“Five of the last six years, we’ve had below trend yield line,” he explained. “So as we head into this next marketing year, when we get into May, we’re going to have the USDA give us their stocks-to-use forecast, and that stocks-to-use forecast is likely going to use trendline yield.” 

His word of caution to cattlemen is that the predicted weather — warmer and drier in corn country for the year — is going to likely lead to a corn crop slightly below the trend yield line. 

China is not a player in the corn market. At this time last year, Bocklemann said the United States had shipped 90 million bushels. This year, however, we haven’t even exported a million bushels yet.

South Korea and European Union are two relatively new buyers. Columbia and Japan continue to be strong trading partners, keeping exports open in other countries even as there are tariff concerns in Mexico. 

Bocklemann currently predicts spot corn future prices at $4.40, but admitted it’s a conservative number. 

“It could be $4.50 or $4.60, because it’s going to matter what happens here over the course of the next three to five months,” he said, noting the first thing to watch will be the amount of increase in corn acreage.

The bottom side of the market sees prices at closer to $3.75, but Bocklemann doesn’t foresee a lot of time spent below the mark of $4. 

Relative to the spot corn futures, Bocklemann said the average U.S. hay price is recovering from being at an all-time low two years ago since 1954. 

“We do believe that even though we have rebuilt the hay stocks a little bit from those low levels two years ago, a little bit more drier weather, hay prices are going to follow corn a little bit higher here,” he said. 

He also predicts volatility in the soybean market. Smaller acreage means no significant increase in stocks to use. Bocklemann said exports will be strong, with about half going to China. 

There is the retaliatory tariff to consider. Soybeans aren’t currently included, but Bocklemann explained producers must be prepared in case that changes. 

He said, “The last time they retaliated with those tariffs, they did hit pork, they did hit beef, they did hit soybeans. That could limit some of that export potential.” 

Bocklemann predicts another conservative amount of $10-12 in the futures markets. 

Wheat continues to be a global commodity, and he said the stocks will echo soybeans as they continue to push a little lower. 

Energy is also in an equilibrium, as supply and demand are essentially equal. Prices should be relatively flat, as they’re driven more by geopolitics than supply and demand. 

In terms of risk management, Bocklemann said agriculturists might start selling or shorting some of their crops as the industry goes into rallies in the spring. 

“Whether on the farm side or the cattle side, we might want to be a little bit more cautious to taking on risk in these commodities,” he encouraged. 

Tighter supplies will continue to drive prices until the markets figure how to ration some of the demand, he concluded.