2026 Feed Outlook Has Margin Risk

At Terrain, we’ve been calling 2026 a high-stakes year for cattle feeders. Margins matter. That means having a plan for your feed costs matters, too. Our early outlook for the 2026/27 crop includes some risk toward higher corn prices but steady to lower prices for soybean meal and dried distillers grains with solubles (DDGS).

Ample Corn Supplies, Shifting Risk

The corn market finished the 2025 U.S. growing season with ample supplies. Large planted acreage and record yields produced a record crop, keeping harvest prices under pressure. Since then, record supplies have been met with record demand, and average cash prices have risen modestly.

• Exports remain the primary price support. The USDA’s current estimate is for exports to total a record 3.3 billion bushels for the 2025 crop’s marketing year.
• Corn use for ethanol also continues to be robust, although DDGS exports were softer, down over 4% over last year, primarily due to reduced sales to China.

Our current forecast is for slightly higher corn prices over the next six months. The market is currently pricing in comfortable supplies and steady demand. Lower corn prices would require either noticeably weaker consumption, another above‑trend production year for the 2026 crop, or both. The market has more upside risk.

South America Adds Uncertainty

Markets are now paying attention to South America ahead of U.S. planting. Weather risks in Argentina and the formation of Brazil’s second‑crop corn remain central to global supply expectations.

An increasing share of Brazil’s second-crop corn is being consumed domestically in corn‑based ethanol production. That shift tightens export availability and contributes to growing DDGS supplies outside the U.S.

Brazil recently began exporting DDGS to China and will likely continue to pressure U.S. global market share. If U.S. exports decline, prices could follow, providing opportunities to increase DDGS in our domestic feed rations.

A Modest Shift in 2026 Acres With Outsize Impact

For 2026, Terrain projects U.S. corn acreage to decline to about 94 million acres. Recent price movements in January and early February might push more acres to soybeans and lower our corn acreage estimate. Final February crop insurance prices and weather will help determine final acre decisions.

Even a small reduction in corn acres could make a meaningful adjustment to U.S. supplies. In that scenario, yields slightly below trend in 2026 could move prices noticeably higher later in the year. Even at trend yields, the expected acre reduction from last year removes about 900 million bushels from our early estimate for 2026/27 supplies.

There may be basis risk ahead, too. For the 2025 crop, corn production in the western corn belt was 18% to 73% above the five-year average, contributing to the weak corn basis across much of this region. If the east-west production balance normalizes in the year ahead, this basis could move toward more normal levels, adding to the average price risk already discussed.

While supplies are adequate today, the risk buffer for higher prices may be more fragile than it appears if corn acreage slips or weather turns adverse.

Biofuels Keep Feed Ingredients Affordable

Soybean prices remain volatile. Uncertainty around U.S. biofuel policy and the pace of Chinese purchases have contributed to sharp price movements, and this volatility is likely to persist in coming months. Brazil’s expanding soybean production — potentially a record crop — continues to weigh on prices. If China’s purchases slow or shift more heavily toward South America, the U.S. export pace could soften, encouraging additional domestic crush.

Growing use of soybean oil for biofuels supports this domestic crush, increasing soybean meal supplies and keeping protein feeds relatively affordable into 2026. Similarly, strong ethanol production is providing abundant DDGS supplies. Potentially higher corn prices ahead could improve relative DDGS affordability while strong crush keeps downward pressure across all protein meal substitutes.

Stay Focused on Market Activity

Over the next six to nine months, the chances of corn prices moving down are limited without another exceptional crop year. Risk management strategies that protect against higher feed costs, while preserving flexibility, merit consideration as weather and acreage decisions come into focus. Key factors to monitor include:

• Brazil’s second‑crop planting progress and growing‑season weather
• Continued expansion of Brazil’s corn‑based ethanol industry, limiting Brazilian corn exports and strengthening its DDGS trade
• USDA’s planting intentions report (March 31) and U.S. spring weather