Several factors that impacted trade during the 2024 calendar year will again have an influence in 2025.

One of the most talked about market factors on a global scale this year was the state of the world’s economy. Inflation was a major factor for several markets at the start of 2024, including the United States. U.S. inflation fell during 2024, and interest rates were cut as a result. There are now concerns that inflation is again rising, and rates may again firm in early 2025.

The most economic interest was on China where deflation was a factor. Deflation is where consumer demand falls even with cheaper values. The Chinese government offered several different stimulus packages to try to stimulate its economy with little success. While China’s commodity demand remained strong in 2024, there are thoughts it will slip lower in 2025, especially with China overhauling its ag industry to make it more efficient.

Another factor that was a factor for ag in 2024 was weather, much as it is every year. Drought impacted much of the United States during 2024, including the U.S. Grain Belt. While this did take the top end off U.S. yields, they were still record sized in many regions. U.S. drought maps are currently showing drier soils than a year ago. This is not much of a factor at the present time but will be if we inch closer to spring planting without improvement.

Drought is also an ongoing issue for U.S. river systems. Many U.S. rivers saw water levels drop to all-time lows this year, including the Mississippi. Dredging and reduced drafts allowed transit to take place much of the year, but at a higher cost. Given the drought at the Panama Canal and logistic issues it brought there was limited demand at the gulf this year anyway. This pushed demand to the Pacific Northwest, which is where most importer interest is anyway.

Trade policy remains a major issue for U.S. agriculture, especially for key export crops like soybeans, corn, and wheat. In 2024, global trade agreements, tariffs, and the U.S.’s relationships with major agricultural trading partners such as China, Mexico, and Canada were prominent stories. Trade disputes, such as those involving agricultural subsidies or trade barriers, will continue to influence market conditions in 2025. Additionally, the impact of geopolitical tensions and how they affect U.S. agricultural exports could be a significant concern.

Food security remains a major concern in the U.S., especially following the disruptions caused by the COVID-19 pandemic. Supply chain disruptions, inflation, and rising food prices have exacerbated the problem, and ensuring a stable and affordable food supply will continue to be a pressing issue. New policies aimed at increasing food production, improving food access, and addressing food deserts could emerge. The push for local and regional food systems might also intensify as consumers and policymakers seek to reduce dependence on global supply chains.

The 2024 Farm Bill, a major legislative package that sets the agricultural policy framework for the next five years, will be a key focus when it comes to resolving some of these food security concerns. The bill impacts everything from farm subsidies to crop insurance and conservation programs. Key discussions are likely to center on how to balance support for commodity crops like corn and soybeans with the needs of smaller, sustainable farms and rural communities.

Proposals for the next farm bill include $20 billion for ag resource improvements, including those for new farmers and to help finance crop insurance programs. Another $8.5 billion is being ear tagged for food and nutrition programs such as SNAP, the government’s supplemental food program for low-income families. The total proposed farm bill has a cost of $39 billion.

What may be the sleeping giant of the market right now is the renewable fuel industry. Renewable fuel manufacturing and demand witnessed incredible growth in 2024, and this is carrying right into 2025. There are concerns in the domestic market over future renewable fuel incentives, but this is not deterring global growth. Brazil currently has 22 ethanol plants in development or under construction. Not only will these alter the world ethanol market, but global corn trade as well.

We are also seeing expansion in the biodiesel industry at a rapid rate. In the U.S., this has already caused a strain on the soy-oil supply, with reserves dropping to a minimal 5.3 percent. Given projections for expansion to global biofuel manufacturing we may soon see the rest of the world’s vegetable oil supply tighten as well.

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