The U.S. agricultural market is facing a storm of uncertainty, with tariffs, unpredictable weather, and high yield expectations all shaping the outlook for farmers and traders. This was the main topic brought to light by Chip Nellinger with Blue Reef Agri-Marketing, Inc. during an online meeting at the Trend&Hedge Club on March 12, where ASAP Agri serves as an information partner.

Tariffs driving market volatility

Tariffs have been a dominant force in the market, adding to price swings and trade uncertainty. Recent developments with the European Union have only increased concerns, while China, Mexico, and Canada remain critical players in the trade equation. The big question is: how will retaliatory tariffs affect U.S. agriculture, exports, and trade potential?

Market volatility has skyrocketed, with even a single tweet capable of shifting prices dramatically. Many are focused on the immediate downside—fears of lower exports due to tariffs. However, few are considering the potential upside: could future trade agreements actually improve U.S. export opportunities? There’s still a chance for positive outcomes, especially if new deals emerge with Canada and Mexico, both major buyers of U.S. corn, soybeans, meat, and dairy products.

USDA’s high bar on yields 2025

The USDA initially projected 94 million acres of corn (+4% year-over-year) and 84 million acres of soybeans (+3%). Yield estimates stood at 181 bushels per acre (bu/ac) for corn and 52.5 bu/ac for soybeans—high targets that could be difficult to achieve. These figures make the balance quite tight. Even if we assume lower yield, the balance for corn and soybeans in the U.S. will remain rather tight. 

Weather: a crucial factor

Weather could be the wildcard. Drought conditions in key corn-producing areas could significantly impact yields. If corn yield drops by 4.4% (to 173 bu/ac) and soybeans by 6.6% (to 49 bu/ac), supplies will still be adequate but much tighter. Even a brief period of drought could spark market fears and drive prices higher.

Currently, 80% of the corn production area and at least 70% of the soybean-growing region are experiencing drought. It will take significant rainfall to meet the USDA’s optimistic yield projections. Weather will be the dominant market driver in the coming months, especially as planting progresses and pollination begins.

Seasonal trends and market strategy

Historically, corn prices tend to rally until early May, as planting gets underway. By late May, markets stabilize, only to face renewed uncertainty in June as traders monitor heat, drought, and pollination conditions. If weather concerns persist, prices could surge. However, in most years, the market calms down once the crops develop, leading to price declines heading into harvest.

With tariff-driven volatility, high yield expectations, and weather concerns all at play, farmers and traders must navigate a complex landscape. The key question remains: What’s your plan when the market moves?