Corn Market Signals Strength: Yield Drops, Steady Demand Drive Price Surge
Even as the federal government remains partially shut down, commodity markets continue to send clear signals-particularly when it comes to corn prices, which are showing bullish signs thanks to shrinking yields and stable demand.
With official USDA data channels offline due to the shutdown, traders and analysts are relying more heavily on market indicators, satellite data, and basis spreads to assess crop conditions and demand. And those signals suggest that corn markets may be setting up for a sustained rally.
Before shutting down operations, the USDA's Sept. 30 Crop Progress report hinted at production concerns, despite earlier projections of a record corn crop. The report, combined with the Vegetation Health Index (VHI) and Drought Monitor, reveals signs of late-season stress across key corn-growing regions. According to recent satellite-derived data, U.S. cropland VHI dropped nearly 5%, which analysts estimate could cut the 2025 WASDE corn yield by nearly 4%, or around 625 million bushels.
If demand remains consistent with earlier USDA estimates, average cash corn prices could spike significantly-up to $4.70 to $4.90 per bushel, compared to the government's previous forecast of $3.90.
Yet tracking demand remains difficult. Without current federal data on exports or ethanol production, analysts are watching basis levels, carry spreads, and biofuel price relationships for insight. The narrowing carry between December 2025 and July 2026 corn contracts-from 37.25 cents in mid-August to 31 cents in late September-suggests a tightening market. This shift could indicate new end-user buying or reduced hedging activity by producers, both of which support a bullish outlook.
In the biofuel sector, October ethanol futures recently traded at a 13-cent premium to gasoline, the largest margin in four years-signaling strong blending margins and potentially higher corn demand from ethanol producers.
Soybean markets, meanwhile, are showing more caution. Crush margins declined to their weakest levels of the summer by late September, suggesting reduced profitability for processors and less aggressive bidding for soybeans at the farmgate.
With Commitment of Traders reports also halted due to the CFTC shutdown, the market remains partially in the dark. Still, the message from private data and price action is clear: the corn market is gaining strength, and if the yield losses are confirmed once USDA reporting resumes, farmers could see higher revenues at harvest.
