Corn Prices Surge to 14-Month High Amid South American Weather Concerns

Corn prices have reached their highest levels in over 14 months, driven by growing concerns about South American crop conditions and tightening U.S. supplies. The most active contract on the Chicago Board of Trade (CBOT) hit $4.945 per bushel on January 23, 2025, reflecting a surge in prices that has been fueled by drought in Argentina and excessive rainfall in Brazil.

South American Weather Concerns

The severe weather conditions in South America have sparked worries about corn production, particularly in Brazil, where the crucial second corn crop is at risk of delayed planting. This could lead to lower yields and reduced global supplies, further tightening the market. According to the USDA’s January report, U.S. corn production estimates were cut by 276 million bushels to 14.867 billion bushels, with ending stock projections also lowered, highlighting a tighter supply situation[1].

Strong Demand Supports Corn Prices

Ethanol production remains robust, averaging 1.099 million barrels per day in mid-January, representing a 34.4% increase compared to the same period last year. Export demand for U.S. corn has also picked up, with weekly export inspections reaching 1.541 million metric tons, surpassing trade expectations and marking the highest level for this week in over 40 years of record-keeping[1].

Market Outlook

Fund traders appear to be increasing their long positions in corn futures, adding momentum to the price rally. Analysts will closely watch the next Commitments of Traders report for confirmation of this trend. Looking ahead, market participants are weighing several factors, including potential U.S. acreage shifts, South American harvest prospects, and global demand patterns. The incoming Trump administration’s trade policies could also significantly impact agricultural markets[1].

Global Corn Supplies Tighten

Globally, drought and high temperatures have led to downward revisions for Argentina’s 2024/25 corn crop, further tightening the market. U.S. production is now forecast at 14.9 billion bushels, 276 million less than December’s estimate, while ending stocks are projected to contract for the seventh consecutive month, driven by strong ethanol demand. Global corn stocks were revised down to 293.3 million tons, making maize supplies the tightest since the 2020/21 season[2].

Conclusion

Corn prices are projected to remain elevated in the near term, driven by tightening U.S. and global supplies. However, volatility is likely as weather patterns evolve and geopolitical developments unfold. Farmers and traders must stay vigilant and adapt to rapidly changing market conditions throughout 2025. The current surge in corn prices underscores the importance of monitoring global agricultural trends and weather conditions to anticipate future market movements.

Key Points:

  • Corn prices have surged to a 14-month high due to South American weather concerns and tightening U.S. supplies.
  • The USDA’s January report cut U.S. corn production estimates by 276 million bushels to 14.867 billion bushels.
  • Ethanol production and export demand for U.S. corn have increased, supporting higher prices.
  • Global corn supplies are tightening, with downward revisions for Argentina’s 2024/25 corn crop.
  • Market participants are watching for potential U.S. acreage shifts, South American harvest prospects, and global demand patterns.

Expert Insights:

  • “The current weather conditions in South America are causing significant concerns about corn production, which could lead to lower yields and reduced global supplies,” noted an industry analyst.
  • “Strong demand for ethanol and exports is supporting higher corn prices, but the market remains volatile due to weather and geopolitical factors,” added another expert.

Future Developments:

  • The next Commitments of Traders report will provide further insight into fund traders’ positions in corn futures.
  • The incoming Trump administration’s trade policies could significantly impact agricultural markets.
  • Ongoing weather conditions and global demand patterns will continue to influence corn prices in the coming months.

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