Market Analysis

Russia’s invasion of Ukraine turned 2022’s world agricultural markets upside down with grain & oilseed prices nearing or surpassing 2012’s previous records last spring. 

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La Nina’s reemergence (cold current) in the Pacific Ocean added to the price volatility. Rains delaying plantings in the N Plains & the Midwest along with drought slicing both, Argentina & S Brazil, crop prospects during the first half of 2022 hurt outputs. Adding to current smaller world supplies was dryness in Europe & drought resurfacing in the US C and S Plains and WCB decreasing wheat, corn and soybean crop production in these regions.

As 2023 begins, La Nina’s impact on Argentina’s weather has already cut their wheat crop and have impacted their corn & soybean plantings and impacted crop outputs. The USDA’s January 12 World & US Supply/Demand revisions will be the market’s next big price factor.

Given January’s limited crop change history, the USDA’s final bean yield (-0.2 bu) & output (-22 mil bu) are expected to decline slightly (6 of the last 7 yrs). With beans first quarter crush 2 million higher & export sales 95 million bu ahead of seasonal pace, no change in these demand levels are expected. This suggests US ending stocks could be decreased to 208 million with 2022’s residual demand sliced by 10 million bu. Given Mato Grasso’s strong crop prospects, further crop losses than current 4 mmt will be needed in Argentina & S Brazil to spark a big price jump.

Like beans, corn’s yield (0.4 bu) & output (60 mil bu) are expected to dip because of tradition (7 of the last 9 yrs). This will cut US output to 13.87 billion & drop 2022’s total US supplies to the smallest level since 2013. If Dec 1 US corn stocks are near 11.0 billion bu, no changes in either ethanol or feed demand are likely. However, current slow sales suggest a 75 million cut in exports. This will up stocks to 1.272 billion (up15 million) given our smaller US crop.

No change in wheat’s final US crop is expected, but the slow US export sales could bump up 2023’s stocks by 15 million to 586 million bu.

What’s Ahead:

The USDA’s upcoming January US/World crop revisions, Quarterly Stocks & US/World Supply/Demand revisions are always important to prices. Heat & dryness in Argentina and RGDS in Brazil have reduced crop prospects. However, La Nina needs to spread northward to up its impact.

Up corn & bean sales to 80% at $6.70-80 & $15.75-95 in March & begin new-crop sales by 15% at $6.12-15 and $14.40.

More By This Author:

A Smaller US Crop Has Cut Demand, But Stocks Lowest Since 2013
US Fall Exports Dip, But December Stocks May Slip On Lower 2022 Crop
Pre-January Snapshot: 2022 US Corn & Soybean Output