Lower feed prices could bolster 2025 margins

U.S. feed supply should be more than adequate in 2025, if the weather cooperates. Given the expected lower feed prices, dairy farm margins should continue to improve in 2025.

Expect a big 2025 corn crop after a “normal” 2024 crop

In mid-February, the May 2025 corn futures contract rallied a dollar from its August 2024 low. However, the futures price gave back 30 cents from the mid-February highs immediately following the USDA Agricultural Outlook Forum on February 27, 2025, with planted corn acres for 2025 forecast at 94 million (up 4%, or more than 3 million acres, compared to 2024). While the December 2025 new-crop corn futures contract has followed direction with the May 2025 futures contract, it has had more muted rallies and corrections, as the market has been anticipating a larger 2025 acreage number.

In August 2024, the USDA initially estimated a record yield of 183.1 bushels per acre (bu./ac.) for the 2024 crop, but revised January and February 2025 estimates to show yields pegged at 179.3 bu./ac. — closer to the 10-year average trendline yield growth of more than 2 bu./ac. per year. Given the forecast acreage improvement, corn stocks-to-use will rise to just shy of 13%, fueling the USDA’s forecast for the average farm price paid to farmers in 2025 at $4.20 per bushel, down nearly 4% compared with 2024.

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