From Peter J. Meyer, Principal/Crops Economist, Muddy Boots Ag
This year is setting up as the year of demand. After multiple years of supply interruptions, caused by adverse weather conditions globally and the war in Ukraine, both the corn and soybean markets will need to take their lead from changes in both global and domestic demand given the production shortfall stories have become stale. Additionally, the markets will likely not benefit from fund interest as the U.S. Federal Reserve appears to have inflation under control. Even a declining dollar will solicit a muted response from so-called fast money given the inflation situation.
Persistent Bearish Undertones
Regardless of possible production shortfalls in Brazil, that country has now surpassed the U.S. in global corn and soybean exports, a trend likely to continue for the foreseeable future. Argentina’s change in government could result in a more aggressive position in world export markets as well, while China’s birthrate continues to shrink. Domestically, all demand eyes remain on renewable fuels such as Renewable Diesel (RD) and especially Sustainable Aviation Fuel (SAF) as increased soy crush capacity matures during the year while fuel producer tax credits in the Inflation Reduction Act (IRA) come to fruition. Focus on carbon intensity scores (CI) will likely fall to the farm level as end users continue to search for ways to lower their carbon footprints.
Volatility might ramp up later in 2024 as the presidential election nears, although neither party currently enjoys a cordial relationship with China, a country U.S. exporters have come to rely on. Overall, a slightly bearish tone will likely continue throughout the calendar year.
More Outlooks:
Naomi Blohm: Soybeans Could Find New Country For Demand
Dan Basse: Prepare For Abrupt And Sizable Price Swings in 2024
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
