Allendale analyst says drought and ethanol forecasts could hit corn markets

Rich Nelson, chief strategist with Allendale Inc, warned that long-term drought damage and a mismatch in USDA ethanol forecasts could leave corn markets vulnerable to a fresh price swing. For Allendale County producers, that matters well beyond the elevator: a tighter corn market can feed into livestock rations, grocery shelves and fuel-linked expenses if costs keep moving higher.

Nelson’s comments, aired April 10, came as the April WASDE gave traders a clearer look at the 2025-26 marketing year. In that update, USDA raised the U.S. season-average corn price 5 cents to $4.15 per bushel, left export projections unchanged and slightly increased world corn ending stocks. The report pointed to more comfortable supply levels overall, but Nelson said the market may now be entering a phase where domestic demand and South American production revisions will drive the next price move.

The concern for farmers is that USDA’s supply picture is still built on very large numbers. The agency has projected 2025-26 corn use for fuel ethanol at 5.5 billion bushels, while forecasting a 15.8 billion-bushel crop on 95.3 million planted acres. USDA’s February Grains and Oilseeds Outlook also projected 2026 corn production at 15.8 billion bushels, about 7% below 2025. If the crop comes in smaller than expected, or if ethanol use underperforms, the cushion can shrink quickly.

That is where local effects can start to show up in Allendale County. Corn is not just a grain-market story; it is a cost input for feeders, transporters and households that feel price pressure through meat, dairy and packaged foods. Fuel costs can also move with ethanol demand, and the U.S. Energy Information Administration held its 2025 and 2026 fuel ethanol production forecasts steady in its April 10, 2025 outlook, even as USDA’s ethanol usage assumptions remained unchanged. Brownfield’s grain crush data showed April 2025 corn use for fuel ethanol at 425.801 million bushels, down 6% from March but up 1% from a year earlier, a sign the demand side can shift even when headline forecasts stay put.

Weather is still the swing factor. The U.S. Drought Monitor for April 7-11 showed rainfall improvements in parts of Texas, Oklahoma and Louisiana, but much of the Western U.S. remained generally dry. For Allendale County growers, that uneven backdrop is a reminder that corn prices can react fast when drought, feed demand and ethanol numbers stop lining up.