Producers pulled off a quick harvest in 2023, aided by dry weather and the ever-increasing capacities of modern harvest equipment. While yields varied considerably across the growing regions, national averages were at respectable levels after overcoming several periods of hot and dry weather during the early and late summer months.
As of December, the USDA’s corn yield estimate stood at 174.9 bushels per acre, up from 173.4 bushels per acre in 2022. Soybean yields are estimated at 49.9 bushels per acre, up slightly year-over-year.
The time following harvest normally brings optimism for ag producers as they finally get to see the fruits of their labor. For corn, that positivity is being tempered by lower prices in late 2023, compared to the last few years, as supplies in both the U.S. and global markets are forecast to increase by a large margin. Soybean prices have stayed more resilient as supplies remain tight in the U.S. and that has helped to keep domestic prices for the oilseed strong. Wheat prices have been pulled lower, partially due to the burdensome corn stocks; however, global stocks for 2023/2024 wheat are forecast at eight-year lows, so there is not a lot of room for production issues next year.
Brazil experienced a large increase in corn and soybean production in 2023, with crop totals reaching records levels due to expanded acreage and cooperative weather. This allowed China to source a larger percentage of their commodity imports from South America as compared to years’ past. China only began allowing imports of corn from Brazil in late 2022. This new development, combined with a stronger U.S. dollar and limited domestic supplies from previous year’s crops, led to a loss in corn export market share for the U.S. that continues into today.
Domestic demand remains strong for corn, but with the large decrease in exports for the 2022 crop, combined with a major acreage and production increase with the 2023 crop, our ending stocks scenario for 2023/2024 went from concerning to plentiful in one short year. Global soybean stocks are forecast at record levels for 2023/2024 - in contrast, U.S. soybean stocks are very limited. While our soybean exports have declined each year since the record amount in 2020/2021, supplies are yet to be rebuilt to comfortable levels in the U.S. as we had a surprisingly low number of planted acres in 2023 and crush demand continues to increase.
Now that production is largely known in the U.S., most of the market’s attention has turned to the weather in South America. Argentina’s weather has been much improved since last year, but the early to mid-growing season for soybeans in central and northern Brazil has been hot and dry and that has heavily influenced prices as of late. This area of Brazil is where most of the soybean production occurs and also happens to be where South America’s largest corn crop will be grown following the soybean harvest.
The potential for continued dry weather in this region is the biggest wildcard for prices at this time. Conversely, if Brazil’s weather normalizes going forward, this has the potential to further pressure prices.
As producers approach the next growing season in the U.S., more accurate acreage estimates for 2024 will begin to emerge. The projected acreage mix affects market sentiment – currently, producers are expected to increase soybean acres in 2024 in response to better pricing opportunities while reducing corn acres. At the end of the day, weather still has to cooperate in two hemispheres throughout the year in order to keep the world supplies in balance – and that unknown gives us price volatility and opportunities.
Anyone interested in assistance with their grain marketing program, managing input costs, and other facets of their farming operation can contact an FNC Farm Manager.