Challenges come with opportunities

According to MXV, as of the end of July 2024, corn prices traded on the Chicago Mercantile Exchange had plunged more than 20% compared to the beginning of the year.

The global corn market has continued its downward trend for the second consecutive year, posing many major challenges in 2025. Fluctuations in economic, trade and weather policies are forecast to create an unpredictable picture for this agricultural product. Will corn have a chance to break out and regain its position after two years of stagnation? This will be a big question for investors and businesses in the new year.

Oversupply in the market causes corn prices to "plummet"

Looking back at 2024, the corn market fluctuated relatively unsteadily and ended the year with a slight decrease. The Vietnam Commodity Exchange (MXV) said that by the end of July 2024, corn prices traded on the Chicago Board of Trade (CBOT) had plummeted more than 20% compared to the beginning of the year. Notably, in the trading session on August 26, corn prices plunged to 361 cents/bushel ($142.12/ton) - the lowest level since September 2020. However, the price of this commodity quickly recovered strongly afterwards, almost erasing the previous decline. This development shows the unsteadiness and unpredictability of the market when prices are governed by supply and demand factors.

Corn price developments over 3 years

On the supply side, global corn production remains high, especially in the world's largest producing countries such as the US, Brazil and Argentina. According to data from the US Department of Agriculture (USDA), total global corn production in the 2023-2024 crop year will reach 1.23 billion tons, an increase of 70,000 tons compared to the previous crop year. Abundant supplies have contributed to pressure on price movements.

Meanwhile, on the demand side, the corn market is also greatly affected by the economic situation in China, the world's leading corn importer. The Chinese economy continued to face difficulties over the past year due to the prolonged real estate crisis and economic stagnation. This caused people to tighten their spending, reducing demand for corn.

After a boom in imports in late 2023, China’s corn purchases have slowed to a low level last year. According to data from China Customs, the country’s total corn imports in 2024 fell by a shocking 49% year-on-year to 13.78 million tons of corn. Of which, Brazilian corn remains the top choice due to its low prices, followed by the US and Ukraine.

China's corn imports in 2023 - 2024

However, Mexico, the largest corn importer of the US and the third largest corn importer in the world, has maintained stable demand. This is a “bright spot” that has helped US corn exports record a marked improvement in the final months of the year, thereby helping CBOT corn prices recover strongly.

Mr. Nguyen Ngoc Quynh, Deputy General Director of the Vietnam Commodity Exchange (MXV), commented that the corn market in 2024 has experienced many fluctuations with the tug-of-war between supply and demand factors. Although abundant supply from major producing countries such as the US, Brazil and Argentina has put downward pressure on prices, the strong recovery of CBOT corn prices at the end of the year shows the attraction of stable demand from major import markets such as Mexico. In the current context, supply and demand factors, along with trade policies, will continue to be the key to determining corn price trends in the coming time.

Mr. Nguyen Ngoc Quynh - Deputy General Director of Vietnam Commodity Exchange (MXV)

What will the world corn market look like in 2025?

After two years of decline, corn prices are showing signs of a strong recovery this year. However, according to MXV’s forecast, the corn market will continue to fluctuate unpredictably due to the impact of both supply and demand factors, countries’ trade policies, and weather changes.

For Mexico, which imports more than 15 million tons of US corn annually, Trump’s tariffs will worsen relations between the two countries. However, analysts say it is difficult for Mexico to give up its supply of US corn due to its geographical advantage and stable quality. Transporting corn from Brazil or Argentina to Mexico takes twice as long and costs twice as much as from the US. This makes it difficult for Mexican food and feed mills to find effective alternative sources.

Mexico's corn imports through crop years

Meanwhile, China, the leading corn consumer, is facing a difficult choice. If the US escalates tensions, Beijing could impose retaliatory tariffs on US agricultural products, thereby shifting demand to Brazil and Argentina. This would inadvertently reduce China’s supply diversification. If South American supplies are not as abundant as expected, China will be forced to carefully consider food security and the trade war with the US.

The corn market is also expected to face "threats" from the return of La Nina. The World Meteorological Organization (WMO) said there is a 55% chance that La Nina will return by the end of February 2025, but it could also occur between February and April with a similar probability of about 55%.

Typically, during La Nina years, crops in Brazil and Argentina will have to deal with a variety of adverse weather conditions such as drought and frost, which are considered a "time bomb" for global corn supplies.

Typically, corn prices have risen for three consecutive years in 2020-2023, largely due to the impact of La Nina on South American supplies. The return of La Nina adds to the crop risk as this year’s second corn crop, which accounts for 70-75% of Brazil’s annual production, is expected to be planted late due to a delay in the soybean harvest. Late plantings of corn will have a higher probability of adverse weather later in the season, which could be a factor in corn’s price increase in 2025.

The year 2025 is expected to see a major shake-up in the US agricultural supply structure, as prices and trade policies become the deciding factors in land allocation between the two major crops, corn and soybeans. Corn and soybeans are crops produced at the same time of year in the US and often compete with each other for acreage during the growing season.

Both corn and soybean prices will fall in 2024, but soybeans will fall much more than corn. The current U.S. corn-to-soybean price ratio is well below the standard 2.5, meaning corn is more profitable to grow than soybeans.

Soybean/Corn Price Ratio

According to analysis by S&P Global Commodity Insights, corn acreage in the U.S. is expected to increase by 3.2 million acres to 93.5 million acres in 2025. In contrast, soybeans continue to “lose ground,” with an estimated acreage reduction of 4.3% to 83.3 million acres. This reflects expectations that U.S. corn supplies will expand further next year.

However, this expansion also poses a challenge in terms of consumption. If corn exports from the United States to China and Mexico encounter obstacles, the surplus supply could cause CBOT corn prices to fall sharply.

In a scenario where US exports are not significantly affected by Trump’s policies and South American crops are affected by bad weather, US supplies will receive market attention, thereby boosting exports.

Another factor expected to have a strong impact on prices next year is demand from China. After a year of struggling with a property crisis and sluggish domestic consumption, China is trying to revive its economy through bold stimulus measures. If these measures prove effective, the country’s demand for corn is expected to increase significantly, providing a strong boost to global corn prices.

China is a major corn importer, with demand coming mainly from the livestock and ethanol industries. As the Chinese government focuses on restoring domestic production and consumption, corn demand is expected to improve. However, the extent of the recovery will depend on the effectiveness of economic policies as well as the consumption of meat and other livestock products.

Demand from China will likely be a key factor in determining the direction of corn prices in 2025. However, specific developments will need to be closely monitored in the context of a volatile economy.

According to MXV, 2025 is expected to be a challenging but also promising year for the global corn market. Large supplies from the US and South America could continue to put downward pressure on prices, especially if the Trump administration’s trade policies impact exports. However, the return of La Nina and crop delays in South America could provide a boost to corn prices. In a volatile global economy, investors need to closely monitor developments in trade policies and crop yields to make informed trading decisions.

Source: https://congthuong.vn/thi-truong-ngo-the-gioi-2025-thach-thuc-song-hanh-cung-co-hoi-373593.html