Is 2023 when the shoe drops? Or will it provide some of the same profitable grain marketing opportunities as 2021 and 2022? Questionable corn demand and expected production highs in South America bring major questions to the corn and soybean outlooks. Yet positive factors are evident. Top Producer asked eight analysts to provide their best estimates on price direction and market strategies you can employ this year. Here is one of the eight.
Alan Brugler, Brugler Marketing & Management
A key market factor is the ability of South American producers to expand production. A jump of 35 million metric tons in soybean supplies would be $10 bearish. Same if U.S. corn acres expand and yields beat trend. For soybeans, we expect growing domestic crush and smaller exports.
In 2023, inflation, recession and the Russia-Ukraine situation will influence commodity prices. The Fed campaign against inflation should start to work. Recessions in major importing regions will aggravate cutbacks in consumption at current prices. Supply shocks from Russia and Ukraine will have less impact as world backstops improve, but the situation is unstable.
Markets revert to their mean over time, so there is plenty of downside risk with good growing weather.
At multiyear high grain prices, it usually pays to extend sales coverage more aggressively.
We are at excellent starting prices for sales. Grain holding costs are higher now, which is a bias for earlier cash sales. Otherwise, set price floors on rallies with put option spreads or cash market equivalents (minimum price contracts). Be careful to match cost exposures to revenue opportunities and not squeeze margins when one moves the wrong way. Remember: Things change quickly, so remain flexible.
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