From Dan Basse, AgResource Company President:
Bearish grain prices prevailed in 2023 and will carry forward to early 2024, but one must be careful about becoming too bearish. World exporter grain stock/use ratios are historically tight, and outside of large U.S. corn stocks, the world does not sit on an overabundance of grain. Brazilian corn and soybean crops will not reach their full potential due to a nasty drought across Mato Grosso while Chinese imports of world corn and soybeans are record or near record large. And the value of the U.S. dollar will erode based on $34 trillion of U.S. debt and a U.S. political system that is polarized and damaging foreign investor confidence.
Importantly, managed money is sitting on their largest net short CBOT grain position in four years, which produces considerable upside potential amid any adverse weather that strikes across the Northern Hemisphere next spring. A bullseye for a summer drought is the Black Sea as Russia is unlikely to produce three consecutive record or near record large wheat crops. World weather risks stay elevated into 2025 with the development of a new La Niña phase of equatorial ocean temperatures. The CBOT risk is to the upside following a mid-winter low. CBOT volatility is forecast to be sizable during 2024, and farmers should be prepared to harvest the abrupt and sizable price swings.
More Outlooks:
Naomi Blohm: Soybeans Could Find New Country For Demand
Peter Meyer: 2024 ‘The Year of Demand’
Chip Nellinger: There Will Be At Least One Perceived Threat to Production
Mike North: Markets To Stay In the Doldrums
Jon Scheve: Expect To See Seasonal Rallies and Weather Risk
Angie Setzer: This Year Will Underscore The Importance Of Your Marketing Plan
