Could 2022 offer the same profitable opportunities as 2021? The outlook for corn and soybeans is optimistic thanks to strong demand and potential production shortfalls in South America. Yet headwinds are present. We asked eight analysts to provide their best estimates on price direction and market strategies you can put to use in 2022.
Bob Utterback, Utterback Marketing Services
The macro elements affecting ag prices are as dynamic as I have ever seen them. China’s ag objective is to be self-sufficient as soon as possible. My read is they want to bank inventory so, if they push their expansion plans, trade sanctions will not hurt as much.
This could help exports in the first half of 2022 but cause uncertainty in the last half. On top of this, Russia’s plans to expand and our Federal Reserve’s push for higher interest rates could neutralize the impact of massive government spending and inflationary concerns.
The tiebreaker, as usual, will be the spring weather pattern. If the crops get planted, I believe producers have to have some form of downside protection in place for the last half of 2022.
The pink elephant in the room is we are assuming the current variant of the COVID-19 virus is under control. If we see a more lethal strain, the resumption of lockdowns and supply chain disruptions would continue.
Bottom Line: If your price objective comes before planting, use a put strategy. I would refrain from an “all or nothing” approach of selling futures or cash sales until late July to early August. If no weather event occurs, producers could be forced to store well into 2023. As such, a portion of expected inventory should be sold based on time of year as much as price.
Read More
Naomi Blohm: Corn and Soybean Market Factors to Watch
Bill Biederman: A Dichotomy of Possibilities
Brian Basting: Market Tools That Turn Uncertainty Into Opportunity
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