Harvest is wrapping up in Wisconsin and now begins the preparations for 2023. Steve Nicholson, the global sector strategist for grains and oilseeds at Rabo bank, shares more about the latest economic analysis on the status of U.S. corn and soybean harvest and factors impacting the global commodities outlook for 2023.
Depending on where you’re located, your harvest may have been better than others. The bottom line is if you look at what is happening with corn and soybeans, fundamentals are still good as demand is still high.
“We have had high prices now for two years and we haven’t seen any sort of pullback in demand,” explains Nicholson. “If you look at the demand curve, at the prices where they are today and then look at where we were when the price was that high before, the demand was much lower.”
There are many factors impacting the global commodity outlook for 2023. The weather has not been cooperative in many regions around the world. South America and Europe have been dry and Europe is facing problems of what fertilizer will be available to them in 2023 as many nitrogen plants have shut down. Australia also is facing issues as they have near record crops of wheat and canola but are unable to get it out. Now, they’re getting too much rain and the quality of their market is decreasing.
“Ukraine is also impacted greatly by the current events happening there,” adds Nicholson. “I’ll give them all of the credit in the world as it is amazing they planted crops, harvested, and have been pushing through during this tough time. The world’s buyers have seen these issues and have started diversifying their supply chain which puts more pressure back on the major exporters of wheat and soybeans to make up the difference.”
While this volatility is causing major threats and concerns, they are also opportunities. Nicholson encourages farmers to take advantage of them when they arise but also understand your margins, costs, and use them to recognize opportunities in the market.
“As we go into 2023, we know costs will be high, but we see the revenue side will be good to give positive margins. The message is to understand that margin, know exactly where you need to be, and when the opportunity arises, act on it.”
There are many moving parts in the market, but it’s also important to recognize the speed of these moving parts. Nicholson encourages people to do their best to keep up with the fast paced environment and go to their website for more information.
Leave a Reply