Harvest is wrapping up in Wisconsin and now begins the preparations for 2024.
Steve Nicholson, the global sector strategist for grains and oilseeds at Rabo bank says the USDA’s revised figures, had a substantial increase in corn yields, although this wasn’t entirely unexpected given the circumstances. Reflecting on earlier expectations, he emphasized the surprise factor, considering the dry weather’s impact on initial forecasts.
“Despite lower expectations due to dry conditions, the US crop size remains significant, attributed more to the extensive acreage planted than exceptional yields,” says Nicholson.
Regarding soybeans, Nicholson anticipated relatively stable yields but hinted at a potential slight reduction, emphasizing the importance of demand dynamics over crop size.
When looking at the global market landscape, Nicholson highlighted Australia’s transition from record crop years to an average harvest due to persistent dryness, raising concerns about soil moisture. He also noted that South America, particularly Brazil had challenges such as logistical issues and limited acreage expansion which impacted soybean expectations for the upcoming year.
“U.S. crushing facilities are having increased significance on the domestic soybean market,” explains Nicholson. “The role of domestic demand potentially overshadowing exports in influencing prices and market trends.”
When it comes to looking ahead to 2024, Nicholson says the outlook for corn margins may not be the best.
He says, “We may potentially have negative margins in the coming years. I urge producers to strategize and lock in favorable margins. Additionally there will be potential opportunities for U.S producers due to Brazil’s challenges. I advise against waiting for ideal conditions and advocating for seizing available opportunities.”
He noted that while corn faced considerable challenges, soybeans held more promise due to tighter supply-demand dynamics. Regarding the wheat market, Nicholson mentioned potential opportunities arising from reduced Russian exports, signaling a demand-supply mismatch for milling wheat.
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.