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Grain Supply Standoff: Farmers Resist Lower Corn Prices
South Dakota farmer Eric Kroupa encountered an influx of calls from grain dealers and ethanol plants seeking to purchase his stored corn as prices hit 4-1/2-month highs last month. Though he sold some, he's waiting for higher bids to sell more. Since then, prices have dipped and are now just above three-year lows from February.
"There's a lot of corn out there but it's sitting in the farmers' bins and not the end-users' hands," Kroupa noted. Despite low prices leading to the stockpiling of crops this season, U.S. farmers continue to hold out on selling their corn. For context, early evaluations of summer crops have shown the best conditions in years, and ample grain supplies persist. Reuters interviews with 15 farmers across the Midwest highlighted a significant amount of unsold grain.
U.S. Agriculture Department predictions indicate that by September 2025, U.S. corn inventories could reach a six-year high. This uncertain liquidation timeline may cause fluctuating grain prices in both cash and futures markets. Farmers face the risk of waiting too long, as the influx of new harvests could lower prices this fall. Buyers, aware of this impending harvest, still require sufficient grain to maintain operations and exports during the summer.
Angie Setzer, a partner at Consus Ag, described the current situation as an economic stare-down between growers and buyers. "I've never seen anything like it in my life. No one's engaged, not the farmer and not the consumer," Setzer remarked. This spring, some growers sold enough to address short-term cash needs and are hoping for adverse weather this summer to boost prices. Farmers like Kroupa use futures markets to hedge against further price declines, while others have negotiated reduced late fees from suppliers to hold onto their crops.
Commercial buyers are banking on lower summer prices due to the grain surplus. The USDA plans to update the amount of corn stored on farms in a quarterly report on June 28. As of March 1, on-farm corn stocks were over 5 billion bushels, the second-highest on record for this date. These stocks represented 60.85% of the U.S. corn supply, the largest share since 2005. Some buyers are enticing farmers with premiums for immediate supplies, only to lower prices after meeting near-term needs. For example, Archer-Daniels-Midland recently offered premiums for quick delivery at their Decatur, Illinois, and Cedar Rapids, Iowa plants.
Indiana crop and cattle producer Samuel Ebenkamp sold some corn in early May but chose to retain the rest. He plans to sell if prices rise again but is prioritizing his cattle feed until the fall harvest. His community shares similar sentiments. "There is an insane amount of on-farm storage here," Ebenkamp stated. "It doesn't appear anyone's in a rush to sell."
Analysts maintain that while farmers are sitting on large stocks, demand for corn remains strong. "Ethanol margins are still relatively good. Feed margins are good. So there is demand out there. And as you look at the export sector, it's going to be improving," said Dan Basse, president of AgResource Co. He questioned how this demand would be met during the summer, given the current standoff. "They are short-bought and the farmer is still long. Who is going to blink first?"
