Market Thoughts

  The USDA Ag Forum is estimating a huge increase in corn acres for 2023 with a prediction of 91 million acres compared to 88.6 million last year. USDA is also predicting an average yield of 181.5 bushels per acre. This is almost a 5% increase over last year’s yield of 173.3 bushels per acre. These numbers could push our stocks to use ratio to nearly 13%. With this high of a stocks to use ratio we could very well be looking at the mid $4 dollar range for corn at harvest.

  We all know that these are only estimates and many things can change between now and planting time. If we have great weather nationwide this estimate could be on the low side due to the price relationship between corn and soybeans. If we have planting delays this number may be just a little on the high side. Regardless of whichever scenario we look at we understand that the probability of lower prices for corn will likely come to pass in 2023.

  Each year we have challenges arise that give us marketing opportunities. Weather markets will play a role sometime this year as it has always done in the past. For the second year in a row the Argentina corn crop has been met with some challenging weather issues that could lower their second crop production, which is a positive for our corn markets. In fact, the USDA’s March WASDE report is estimating that 2023 Argentinian corn production could drop from 47 MMT to 40 MMT, equating to about a 20% drop.

  Soybean acreage on the other hand, is estimated to remain constant at 87.5 million acres. Yes, Brazil did have a record crop and that will weigh on the market, but the problems that Argentina has had will mitigate at least a portion of this increase in production. There is also positive news about the uses of soybeans in the production of biofuels that has been in the forefront of the news lately. It is predicted that the stocks to use ratio for soybeans will increase to 7.4%, which is a 2% increase over last year. This should equate to a price of around $13.30 per bushel.  Again it is early and many things can change throughout the year. 

  The geo-political environment we are currently living in is the 500-pound gorilla in these markets. So far, Ukrainian ports and export facilities have been relatively undamaged by Russian attacks. As this conflict continues it is very possible that Russia will start targeting these places to interrupt Ukraine’s ability to export it’s agricultural goods. If and when this occurs the price of grains will likely start to spike giving producer’s here an opportunity to again lock in higher floor prices for their 2023 production.

  Producers that still have old crop in storage will be looking to take advantage of these challenges to sell whenever the markets rally throughout 2023 prior to new crop harvest. 

  The livestock markets look to be on track to having another banner year. With the easing of grain prices and the shortage of cattle, we are seeing the future markets at very high levels. It is amazing to note that there has been little pull back in demand for beef even at these higher prices. The outlook currently remains good for 2023. The only downside to this market is increased production from the pork and poultry sectors which will compete with beef for the consumer dollar. This could potentially put a damper on beef demand and beef cash prices.

  All in all, 2023 should remain a profitable year in agriculture even with the increased input prices. Our growing season is just beginning and there is a lot of time left before the 2023 crop is in the bin. Many things can change and opportunities can pop up anytime. I encourage all producers to keep an eye on the markets and take advantage of all marketing opportunities as they arise.


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