Grain and oilseed markets moved lower to end 2023 and start 2024 as concerns over South America's crops deteriorated and spurts of international demand remained rather mute. The trend is expected to continue until more is know about Brazilian corn potential and 2024 US acreage expectations are released March 29, 2024.
In early January, much attention continued to be given to El Nino's impact on South American production. Digging into the numbers suggested it was going to take either a larger reduction in production relative to expectations or lower prices to clear the market. Lower clearing prices eventually won out. There are local cash markets that will need product periodically and will have to bid up basis prices to attract farmer selling as it does not appear evident futures markets will do that work over the next couple months. At least not for soybeans. While odds are growing Brazil will not produce a record soybean crop, Argentina is expected to increase their production 20 million metric tons year over year- more than enough to make up the difference. The world has the needed soybean supplies and without additional bullish news, the futures market's path of least resistance is lower.
Conversely, corn's price potential is more uncertain. Seventy-five percent of Brazil's corn crop is planted after soybeans. Late planted corn accompanied with an early frost or dry weather would shrink Brazil's corn output and rally prices. In 2015, EL Nino delayed corn planting and shrunk Brazil's corn output relative to expectations 25%. A similar adjustment relative to expectations in 2024 (roughly 1.2 billion bushels) would be enough to change market psychology and move prices higher. It is still early in the season for Brazil's second crop corn and expectations are the crop only marginally decreases. Corn markets continue to find strength on near record corn ethanol grind and supportive export volumes.
Outlook for 2024 Expenses and Returns In the United States, whispers can be heard regarding 2024 total acreage and crop mix. Unexpected acreage shifts across crops can change crop market fundamentals quickly. Relative crop returns for the year ahead across crops are only one factor influencing planted acres across the US. The relationship between crop insurance guarantees is another factor and a warm dry spring has historically indicated higher than expected corn acres.
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Categories: Missouri, Crops, Corn