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.
Matthew Kruse, Comstock Investments
The trade has focused on dismal U.S. corn exports, despite making up only 16% of consumption. We have not yet reached the peak export season, so there is still time for those numbers to have a partial recovery.
Focus will increase on crop production in South America, where drought conditions have expanded in Argentina. Meanwhile, Brazil is on track for a record crop.
I look for continued market fallout from the Ukraine war. While the grain corridor is open, their exports are off by a third versus before the war began. Their status of rationing fuel, lack of electricity, scarce inputs and lack of credit are not conducive to normal production for 2023.
Interest rates will likely play the biggest role in impacting global demand going forward. Higher interest rates will undoubtedly slow growth. This could push the U.S. dollar higher making our exports even less competitive.
For 2023, evaluate your production risk. Drought is still a major factor in much of the western Corn Belt and Plains states. Marketing starts with crop revenue insurance coverage. I would only become aggressive once prices move beyond your breakeven costs.
While profit margins will likely narrow in 2023 versus 2022, grain prices are still profitable. We believe there will be subsequent rallies. Look to set pricing targets selling into rallies as opposed to panic selling on corrections.
Basis levels will be important to determine the value of your cash grain, although how much will depend on the region. Marketing can be challenging, but it requires the same attention and discipline used to raise the crop. Avoid all the market noise and stay focused on meeting your sales targets.
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