Grain and oilseed prices may have passed cyclical lows – CoBank

Despite continued oversupply in global grain and oilseed markets, rising biofuel production and gradually improving export conditions suggest that prices may have already passed their cyclical bottoms. This outlook is outlined in CoBank’s new year-ahead report released by its Knowledge Exchange division.

The report notes that US soybean sales to China have increased recently amid a partial easing of trade tensions. However, Brazilian soybeans remain significantly cheaper, and record oilseed production in countries closer to China, including Kazakhstan, will continue to undermine US competitiveness in the Chinese market. As a result, a return to historic US export volumes appears unlikely.

Global grain supplies remain ample, with larger harvests reported in nearly all major exporting countries for corn and wheat. This situation intensifies competition on international markets and continues to pressure US exports. At the same time, CoBank points to cautious optimism that China may resume purchases of US sorghum, which could provide much-needed support for feed grain prices.

On the demand side, low prices are stimulating increased usage of US grains and oilseeds. Mexico will remain the most important destination for US corn, wheat and rice, as well as the second-largest market for soybeans. Demand for wheat and flour is expected to keep rising in sub-Saharan Africa, while the Middle East and Southeast Asia are increasingly turning to high-quality US soybeans and soybean meal to support expanding poultry and livestock sectors.

Growing global biofuel demand is also strengthening the outlook for grains and oilseeds. In the United States, expected policy clarity on the EPA’s renewable volume obligation and small refinery exemptions should provide greater certainty around blending rates, boosting demand for fats and vegetable oils used as biofuel feedstocks. Internationally, higher blending mandates for biomass-based diesel in Brazil and Indonesia are expected to tighten global vegetable oil supplies and improve crush margins for processors.

At the same time, the soybean meal export market is becoming more competitive as oilseed crush capacity expands further in both the United States and Brazil. Southeast Asia, Latin America and the Middle East are likely to become key battlegrounds for export market share. While livestock producers will benefit from low feed costs through 2026, CoBank expects feed demand growth to remain modest, with high input costs potentially discouraging corn plantings and encouraging farmers to switch to lower-cost alternatives.

Tags: grain, prices, oilseeds