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.
Richard Brock, Brock & Associates
One of the hottest topics is corn basis. Historically, corn basis has been wide in the Midwest and the western Corn Belt, while tight in the East. In 2022 it was the opposite. What happened?
Well, corn production in the western Corn Belt peaked in 2016. Even though corn yields are going up due to genetic improvements, weather issues always slow production somewhere. In 2021, the crop was hurt in Minnesota. In 2022, Nebraska had a drought. Three years ago, it was Iowa.
At the same time, demand for corn in those areas has increased significantly. Ethanol has been going gangbusters. Hog and poultry
production has expanded, thus there’s a supply and demand imbalance.
This year Ontario had a good crop and much of that corn is flowing into the northeast U.S. Yields in that area were also good, and for the first time I can remember corn basis is a negative on the East Coast and positive in the western part of the Corn Belt.
With all that said, the key fundamental in corn right now is choking demand. Corn exports are at a five-year low. Additionally, livestock demand for corn has dropped.
Corn has shifted from a major bull market that has lasted two and a half years to a bear market. It is important to recognize the change in trend. This is a year to be an aggressive seller, but many producers will not because it has not paid to do so in the past two years.
Soybean prices will be torn between expansion in renewable diesel and the big increase in South American production. Expect a top in soybean prices in early 2023.
But remember, these prices are very profitable. A bird in that hand is better than two in the bush.
Read More
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Alan Brugler: Consider Grain Holding Costs and Set Price Floors
Matthew Kruse: Avoid Market Noise and Stay Focused on Price Targets
Naomi Blohm: Use Seasonal Grain Tendencies to Your Advantage This Winter
Bill Biedermann: The World Needs Both North and South American Bin Busters
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