CoBank Signals Commodity Prices May Have Bottomed Out

Commodity markets may have moved past their cyclical lows, even as global grain and oilseed supplies remain abundant, according to the US cooperative bank, CoBank’s latest year-ahead outlook released by its Knowledge Exchange. The report notes that rising biofuel production and gradually improving export prospects are strengthening sentiment across agricultural markets.

Despite a recent pickup in US soybean sales to China following a partial easing of trade tensions, the report cautions that US exports are unlikely to return to historical highs. Brazilian soybeans remain significantly cheaper, while record oilseed output in countries such as Kazakhstan, closer to the Chinese market, continues to undermine US competitiveness.

Global grain supplies remain ample, with strong harvests reported across nearly all major corn and wheat exporting nations. This surplus is expected to intensify competition in international markets, further challenging US export prospects. However, CoBank points to potential support for feed grain prices if China resumes purchases of US sorghum, which could offer some relief to the market.

On the demand side, lower prices are expected to stimulate greater consumption of US grains and oilseeds. Mexico, the largest buyer of US corn, wheat and rice and the second-largest destination for US soybeans, is projected to grow in importance. Wheat and flour demand is also rising steadily across sub-Saharan Africa, while countries in the Middle East and Southeast Asia are increasingly sourcing high-quality US soybeans and soymeal to meet the needs of expanding poultry and livestock sectors.

The global push toward biofuels is further bolstering demand for grains and oilseeds. In the United States, clarity around the Environmental Protection Agency’s renewable volume obligations and small refinery exemptions is expected to improve blending certainty, boosting demand for vegetable oils and fats used as biofuel feedstocks.

Internationally, higher biodiesel blending mandates in Brazil and Indonesia are likely to tighten global vegetable oil supplies and improve processing margins for crushers.

At the same time, competition in the soybean meal export market is set to intensify as oilseed crushing capacity expands in both the United States and Brazil to support biofuel production. Southeast Asia, Latin America and the Middle East are expected to emerge as key battlegrounds for market share between the two exporters.

Livestock producers are expected to benefit from relatively low feed costs through 2026, encouraging feed usage, though overall growth in feed demand is likely to remain moderate.

On the production front, high input costs may weigh on planting decisions. With prices for most crops currently below production costs, farmers could reduce corn acreage in favor of lower-cost alternatives, the report noted.