Corn, soybean demand outlook mixed pies

BLOOMINGTON, Ill. — The outlook for the four pieces of the demand pies that drive corn and soybean prices is anticipated to include some growth and a wild card in 2026.

Joe Janzen, University of Illinois agricultural economist, sliced the demand pie to open U of I Extension’s Farm Assets Conference on Dec. 12 at the AgriCenter in Bloomington.

Here are Janzen’s views on what has and could happen in the new year on the demand side of the crop balance sheets.

On Feed

The two big domestic pieces are animal feed. That means meal in the case of soybeans and corn used for animal feed.

Overall, in terms of feed’s impact on grain prices, my take is that we’re certainly not in the stage where we’re going to see dramatic growth in that corn for feed number or the domestic meal demand number happening in the next six months to a year. It’s probably going to take longer than that.

The big story is when will the U.S. livestock herd begin to grow again? We saw that cattle herd shrank into 2014 when prices got really high. We rebuilt the herd, then we’ve had drought and other issues that have caused a substantial reduction in overall cattle inventories. That is expected to maybe hit bottom.

The number as of Jan. 1, 2025, was 86.7 million cows and calves in the United States. USDA’s expectation for overall cattle numbers is basically to be flat Jan. 1, 2026.

Everyone is looking for signals of a cattle herd rebuild. The way that we would see that, potentially, is a reduction in the number of cattle on feed as heifers get retained to build the herd.

We’ve actually seen the number of cattle on feed be remarkably stable in spite of overall reductions in the size of the herd.

We had about 12 million animals on feed as of Nov. 1. The most recent data suggested that the November 2025 number was like a slight reduction, so maybe this is a signal that we’re getting some of this retention and maybe a boost in feed demand into 2026 as the herd grows.

This is complicated by our trade situation where we should be typically bringing animals across the border from Mexico into the United States to be fed here. That isn’t happening because of some of the trade issues or pest issues in the livestock sector.

So, that number fell in November, but people are saying that’s not necessarily a strong indicator of a herd rebuild.

On Biofuels

The picture’s relatively strong on the biofuel side. The growth in the last few years has been all in the soybean oil used for the biofuels piece, but it’s important to remember that that slice is a relatively small slice of the pie, because every bushel of soybean is only about 20% oil and we’re using roughly half of the oil that we produce here in the United States for biofuels. That proportion is expected to increase. I think some of that’s built into pricing already.

We’re producing levels of ethanol that are very similar to where we were in that pre-COVID maximum level, maybe some slight increases above that, but overall the ethanol production is looking really strong and we’re growing renewable diesel. This is increasing oil’s value in the crush.

In the last five years, we’ve seen a shift in the soybean sector away from meal as the primary demand driver and toward oil. Now the value of a soybean is between, say, 35% to 50% oil and a corresponding percentage coming from meal, and this thing is getting much more volatile.

The thing I think about going into next year is there’s a strong potential for biofuels demand in the soybean sector, but it’s creating maybe a little bit more volatility than it did pre-2020 when this share was relatively stable.

On Exports

Sort of the big wild card, the one that we maybe think about the most in terms of its impact on price because it is much more flexible is the export piece.

The feed piece and the biofuels piece tend not to move a lot. They tend to be what economists would call relatively inelastic. They aren’t very sensitive to price.

We use about the same amount of corn for ethanol no matter the price, year to year, and that export piece is really the flex piece that, if we have a big corn crop in the U.S., as we think we do, how are we gonna use that up?

This export piece for corn is growing. This export piece for soybeans is shrinking. At this talk even just two years ago, that slice of the pie would be substantially larger.

There’s this idea that maybe the trade war is cooling off. We certainly haven’t seen the level of tariff tit-for-tat that we saw back in the spring, particularly around what was called Liberation Day and the huge raft of U.S. tariffs that was announced in April.

Both Treasury Secretary Scott Bessent and Agriculture Secretary Brooke Rollins say we are right on track, everything is going well, that China is in the “correct cadence,” according to Secretary Bessent, in terms of its purchases of U.S. soybeans. I think everyone should be right to be somewhat skeptical of those claims.

Maybe the trade war’s cooling off, but it’s cooling off to a place where there has been a substantial and persistent decline in U.S. soybean export demand. We see that in the Chinese customs data on soybean imports from all destinations. We can get data on what’s going on with Brazil.

We’re seeing China is importing more soybeans than ever, the highest levels of monthly soybean imports into China we’ve seen in recent memory. None of that’s coming from the U.S.

Where it typically starts to ramp up U.S. exports to China — in September, October, November — have been zeros. We’re going to see something in December, we just don’t have the data yet. The ships are on their way, but the number is going to be really small, and we see that in our soybean export sales pace.

We are substantially below soybean exports relative to the previous year. There’s just no sort of beating around the bush. We just are substantially below where we would normally be in terms of soybean exports, and China has to be the culprit.

What we know about Chinese soybean purchases to date, they are 26% (as of Dec. 12) of the 12 million metric ton target for calendar year 2025 that the Trump administration said. That’s their target, not mine, and not China’s necessarily.

We’ve got about 118 million bushels of known China purchases. Some of those have already happened as of mid-November when the data from other countries is most recent. They are only 23% of all of our export sales to date.

China is typically a substantially larger percentage — more than half. So, that 25% of the business is basically gone. I don’t see how it comes back because we’re into December, January where basically our soybean export business drops off perceptibly.

A lot of that is built into the current USDA supply and demand forecast level for soybean exports, but I’m even worried about getting to that level. If we continue on this pace, sort of what the typical pace looks like, we get somewhere closer to more like 1.4 billion bushels of total soybean exports, and that’s substantially below that typical pace.

Corn export sales, totally the opposite. Corn export business has been incredibly strong. I think part of that is a function of relatively low prices and the big U.S. corn crop. A lot of that’s baked into USDA’s current supply and demand tables, as well.

On Trade Policy

The last sort of wild card here is what does happen to trade policy. The tariffs that we imposed on many countries back in the spring could be ruled invalid by the U.S. Supreme Court. That’s a case that they heard back in November and will rule on in the new year.

We have betting markets that are trading on the probability that that indeed happens, that the U.S Supreme Court rules that those tariffs are illegal and they put the probability at the Trump administration winning that case at only about 25% right now.

How much stock you take in that number? I leave that to your own personal discretion, but it looks like we could see a substantial amount of trade policy uncertainty going forward into the near future. It’s not over yet.