From Mike North, President, Ever.Ag Producer Division
Corn and soybean markets could remain in the doldrums in 2024. Near term, the soybean market has a loftier perch with a tight balance sheet emerging from supply headwinds. Drought in Argentina cut into global supply. However, this year, Argentina’s favorable growing weather has ended a drought and will sharply increase production. Also, a new president is supporting economic initiatives that will encourage world trade. These factors will put pressure on the bean market.
The other reason to be bearish in soybeans is USDA’s projected growth of year-over-year global demand set at 5.4% versus a five-year average of 1.5%. This is likely overestimated; USDA needs to trim its estimate in 2024.
China, our biggest soybean buyer, has a soft economic outlook. This broadens concerns for the soybean market.
The signal in the market is for U.S. farmers to plant more soybeans, which could mean 3 to 4 million more soybean acres than a year ago. This would add downward pressure on the market.
Corn Price Pressure
If the soybean market starts to fall as more supply comes out of South America, the corn market will get dragged down with it. Corn doesn’t need additional pressure, when you consider its already big balance sheet.
Historically, a 15% stocks-to-use ratio means a market with a $4 handle or below. Currently, with a $5 new-crop price and a 15% stocks-to-use ratio, there’s a lot of risk on the table.
More competition is anticipated. USDA pegs Argentina’s corn production at 55 mmt for 2023/24, up from last year’s estimate of 34 mmt.
More Outlooks:
Dan Basse: Prepare For Abrupt And Sizable Price Swings in 2024
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
Jon Scheve: Expect To See Seasonal Rallies and Weather Risk
Angie Setzer: This Year Will Underscore The Importance Of Your Marketing Plan
