What’s Driving Price Discovery In The Corn and Soybean Markets?
- Planted Acres. Record corn producer profitability in MY 22/23 combined with ample opportunities to hedge MY 23/24 crop can lead to 91+ million planted corn acres and 87+ ma of soybeans.
- Production costs. Falling fertilizer and diesel costs are lowering the fair value of new crop US corn and soybean prices.
- Weather. The La Nina climate cycle is ending. A transition to an ENSO-neutral cycle during the spring and a weak El Nino cycle during the summer should occur.
- Transitioning to neutral and weak El Nino cycle is supportive US MY 23/24 corn and soybean yield objectives. Reversion to trend yields is a growing probability.
- Competing origins. Record estimated corn and soybean production/exports in Brazil can suppress US exports.
- Biofuels policy. US fuel policy shift to year-round sale of E15 gasoline in April 2024. Biodiesel and SAF are driving domestic soybean crush demand.
- Ukraine. More unknowns that knowns about the country’s MY 23/24 corn production and exports.
- China. Always a wild card for US corn exports and MY 23/24 should not differ.
- US dollar strength. Strength of the US dollar in MY 22/23 reduced the competitiveness of US exports.