Productivity improvements and expanded planting areas have increased global supplies of corn and soybeans over the past three decades. According to the U.S. Department of Agriculture, yields for these crops in the United States rose by more than 20 percent from 2010 to 2025, with corn acreage increasing by 10 percent and soybean acreage by 2 percent. Similar trends have been observed in other major exporting countries like Brazil and importing countries such as China, resulting in a doubling of worldwide corn and soybean supplies during this period.
In the United States, much of the additional supply has been used for biofuel production and exports. The most significant growth in demand for U.S. corn has come from ethanol production, particularly after Congress passed the Renewable Fuel Standard (RFS) in 2007. This legislation required refiners to include specific amounts of biofuels in gasoline and diesel, leading to higher demand for both corn (for ethanol) and soybean oil (used in biodiesel). Soybean exports also doubled between the periods of 1990–2009 and 2010–25 due to rising demand from China.
Despite increased exports since the early 2000s, the U.S. share of global trade in these crops has declined as competitors like Brazil have gained market share, especially in key markets such as China. Infrastructure improvements abroad have enabled other exporters to compete more effectively with U.S. producers. Ongoing trade disputes and competition are expected to further limit export growth as a source of demand for American crops.
Looking ahead, changes to biofuel policy are expected to be a main driver of future demand for U.S. corn and soybeans. Proposed adjustments to RFS quotas could increase requirements for biomass-based diesel by 50 percent from 2024 levels by 2026–27 while also raising quotas for renewable fuel (corn ethanol) and advanced biofuels that use soybean oil or other feedstocks with high greenhouse gas reductions. If approved, these changes would prioritize North American inputs over foreign ones when counting toward biofuel mandates, potentially increasing domestic crop demand.
The Environmental Protection Agency estimates that meeting new biodiesel mandates would require an additional average of 250 million gallons per year—equivalent to over five million metric tons of crushed soybeans or about four percent of current U.S. production.
Federal tax incentives may further support domestic crop use in biofuels production. The Clean Fuel Production Credit (45Z), extended through 2029 under the One Big Beautiful Bill Act (OBBBA), offers up to $1 per gallon but only applies if feedstock comes from North America. The OBBBA also changed how environmental benefits are calculated by removing indirect land-use penalties, which could favor crop producers.
Recently, U.S. crop producers have faced tight profit margins due to oversupply relative to demand amid growing international competition and trade tensions that threaten export markets for corn and soybeans. However, federal policies supporting biofuel production may provide alternative sources of demand that could help absorb some excess supply 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.”
