Prices encourage a larger US maize area for 2025: Grain Market Daily

• UK feed wheat futures (May-25) ended yesterday at £189.45/t, up £0.85/t from Monday’s close. The Nov-25 contract fell £0.20/t over the same period, to close at £194.50/t.
• Domestic wheat futures closed mixed yesterday. Chicago wheat futures (May-25) were up 1.77% and Paris milling wheat futures (May-25) were down 0.10% at yesterday’s close.
• European Commission data showed yesterday that the UK is the third largest importer of wheat from the EU in the 2024/25 season to 2 February with a volume of 960 Kt shipped to the UK.
• For the domestic market, currency impact on grain and oilseed prices may increase due to the Bank of England's interest rate decision tomorrow (6 Feb). The market forecast is a cut from 4.75% to 4.5%.
• May-25 Paris rapeseed futures closed at €522.00/t yesterday, up €3.00/t from Monday’s close. The European Commission reduced its own forecasts for rapeseed imports in 2024/25 from 5.9 Mt to 5.8 Mt.
• Chicago soyabean futures (May-25) were up 1.42% on yesterday’s close, supported by news that tariff concerns were easing. Weather concerns for South American crops (dry weather in Argentina and rain in Brazil) remain one of the factors supporting grain and oilseed prices.

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Lately, upward movements in maize prices have been adding some support to the overall feed grain market. For the current 2024/25 marketing year the global maize balance is tighter. Production is lower than domestic consumption and global maize ending stocks are at a 10-year low of 293.34 Mt (USDA).

For the 2025 harvest, maize prices will have a major impact on its planted area in the US. Higher corn prices theoretically encourage farmers to plant more, but for a clearer picture, the price relationship between maize and soyabeans needs to be analysed, given they can both be planted on much of the same area. Traditionally in the US, farmers in February/March face a dilemma, what is better to plant maize or soyabean?  And at the moment, maize looks more promising than soybeans.  

The Chicago futures price parity for soyabeans (Nov) to maize (Dec) was 2.13 on 2 February, compared with 2.29 at this point last year. This means that maize is 7% more competitive for planting than at the same time last year. Moreover, the current parity is at its lowest level in four years. This is a serious argument for pressure on feed grain prices for the 2025 crop.

Why is this important for the UK?

With the US the largest maize producer globally, changes in US output can have an impact on feed grain prices globally and therefore domestically. In a scenario where the US maize area increases due to price stimulus, domestic feed wheat prices for the 2025 crop could come under pressure, but rapeseed prices for the 2025 crop could find support from changes in the wider oilseed complex.

The next possible directional change in the soybean/corn ratio could come after the next USDA WASDE report on 11 February 2025.

The USDA's 101st Annual Agriculture Outlook Forum (AOF) will be held on 27–28 February 2025. Traditionally, this forum is used to present the first forecast figures for the US spring crop. This could have a substantial impact on the soybean versus maize price parity.  

The US tariffs on goods imported from Mexico, Canada and China, and the backlash from these countries, add to the unpredictability for the prices and parity of soyabean and maize.  

We will keep you informed of important changes in the soyabean/maize ratio in future Grain Market Daily’s.

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