Grain futures ended 2023 significantly in the red, according to recent Reuters reporting from Brendan O’Brien, with corn futures suffering their “biggest yearly drop in a decade while wheat and soybeans also posted steep annual declines after bumper harvests in Brazil and resilient Black Sea trade tempered concerns about weather and war.”
The most active corn contract (Cv1) was down 31% in 2023, while wheat (Wv1) was down 21% and soybeans (Sv1) were down 15%.
“Grain and oilseeds will end a run of several years of price gains linked to harvest setbacks, the COVID-19 pandemic and Russia’s invasion of Ukraine,” O’Brien explained. “Record corn harvests this year in Brazil and the United States, as well as an all-time high for Brazilian soybean production, have helped offset severe drought in Argentina.”
AgWeb reporter Michelle Rook noted that another factor in 2023’s steep drop in grain futures prices was a commodity reset across the United States “after grain markets set record highs in 2022.”
“Randy Martinson, Martinson Ag, says that was especially true for corn with a record 15.234-billion-bushel (corn) crop, at the same time more than half of the U.S. was hit by drought during the growing season,” Rook said on AgWeb. “‘We had better production than expected, we had poor exports and so all that came into play to kind of push the market lower.”
The Reuters article notes that U.S. farmers will likely continue to feel 2023’s drop in prices into 2024 and will “prioritize planting soybeans in the United States.”
“‘In 2024, producers are going to be a lot more concerned about their input costs and that is where beans play a much better role for them,’ said Mike Zuzolo, president of Global Commodity Analytics.'”
The United States Department of Agriculture also expects soybean acres to increase in 2024, with the November World Agricultural Supply and Demand Estimates report predicting that U.S. farmers will plant 87 million acres of soybeans in 2024, an increase of 3.4 million acres. Corn acres are expected to be 91 million acres, a decrease of 3.9 million acres, according to the USDA.
While we are now in a new year, that doesn’t necessarily mean that the grain market outlook is any better than the steep declines seen in 2023. O’Brien reports that “In 2024, crop markets may facetighter supplies due to adverse El Nino-related weather effects, export restrictions and higher biofuel mandates, analysts said. If El Nino effects are less than feared, farmers may grapple withmountains of corn.”
The AgWeb article reports that there likely won’t be any meaningful rally to corn or soybean markets without “some sort of supply or demand shock to the market.” That shock could come on the supply side with the results of the Brazilian harvest, “but more will be known in January when harvest results start coming in.”
Ryan Hanrahan
Ryan Hanrahan is the Farm Policy News editor and social media director for the farmdoc project. He has previously worked in local news, primarily as an agriculture journalist in the American West. He is a graduate of the University of Missouri (B.S. Science & Agricultural Journalism). He can be reached at rrh@illinois.edu.
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