Over the past several decades, productivity improvements and increased planting have expanded corn and soybean supplies both in the United States and globally. According to projections from the U.S. Department of Agriculture (USDA), yields for U.S. corn and soybeans have risen by more than 20 percent from 2010 to 2025, with corn acreage up by 10 percent and soybean acreage increasing by 2 percent. Similar trends are observed internationally, including in Brazil and China, resulting in a doubling of global corn and soybean supplies over the last 30 years.
A significant portion of this expanded supply in the United States has been absorbed through greater use of crops for biofuel production as well as increased exports. Ethanol production has seen the sharpest growth in demand for corn since Congress enacted the Renewable Fuel Standard (RFS) in 2007, which set quotas for biofuel use among gasoline and diesel refiners. The RFS and related subsidy programs have also raised demand for soybean oil used in biofuel production. Soybean exports doubled between 1990–2009 and 2010–25 periods, largely due to growing demand from China.
Despite these increases, export demand may not be sufficient to absorb further growth in crop supplies going forward. While U.S. exports of corn and soybeans have grown since the early 2000s—securing major trading partners such as Mexico—the country’s share of global trade has declined. Infrastructure improvements abroad have enabled other exporters like Brazil to capture larger shares of markets such as China, Japan, and the European Union. Brazil now leads as China’s primary supplier of soybeans. Trade disputes and competition are expected to further limit future export growth.
Looking ahead, proposed changes to biofuel policy are likely to be a key factor driving future demand for U.S. corn and soybeans. The Environmental Protection Agency (EPA) has outlined proposed increases to RFS quotas for biomass-based diesel—which relies heavily on soybean oil—and renewable fuel made from corn ethanol through at least 2027. If implemented, these changes would raise biomass-based diesel quotas by about 50 percent over current levels while also increasing quotas for other types of renewable fuels that offer high greenhouse gas reductions.
Additionally, proposed RFS modifications would give preference to North American feedstocks by counting foreign inputs toward mandates at only half the rate of domestic ones—potentially boosting demand for U.S.-grown crops like corn and soybeans. The EPA estimates that biodiesel producers would require an additional average of 250 million gallons per year under these new mandates; this equates to more than five million metric tons of crushed soybeans or about four percent of current U.S. soybean production.
Recent updates to federal incentives—including an extension through 2029 of the Clean Fuel Production Credit (45Z)—will further encourage use of North American feedstocks by providing credits worth up to $1 per gallon exclusively for fuel produced with inputs sourced from within the United States, Canada, or Mexico.
Crop producers in the United States have recently faced limited profit opportunities amid oversupply relative to demand; ongoing trade tensions may continue to weaken export prospects for both commodities. However, recent federal policies supporting biofuel production are likely to generate new sources of domestic demand that could help absorb surplus production volumes and support prices.
Francisco Scottand Ayesha Cooray are economists at the Federal Reserve Bank of Kansas City. “The views expressed are those of the authors and do not necessarily reflect the positions of the Federal Reserve Bank of Kansas City or the Federal Reserve System.”
