All eyes trained on U.S. corn crop this season

There is a dizzying array of market factors that could influence crop prices in the upcoming crop year, but Neil Townsend likes to make things simple.

“You can boil 2022-23 down to one variable and that’s U.S. corn yield,” said the FarmLink Marketing Solutions analyst.

U.S. farmers have indicated they intend to plant 89.5 million acres of the crop, a four percent drop from last year.

That will result in tight ending stocks if yields are anywhere below the previous record of 177 bushels per acre.

“If it’s not going to be 178 or higher, we’ve got some problems,” Townsend said during a recent FarmLink webinar.

It is dry in the U.S. Plains heading into spring planting, so record yields are doubtful.

Corn futures were in the $6.60 to $6.70 range at the time of his April 6 presentation.

He believes there is a good chance they are heading higher.

“If I had one prediction for 2022-23, it’s that we’re going to spend meaningful time with $8 corn futures,” said Townsend.

That bodes well for many of the crops farmers grow in Western Canada.

“Any increase in corn is definitely price inflationary for all the other grains and oilseeds in the world,” he said.

U.S. farmers intend to plant 91 million acres of soybeans, a four percent increase over last year. It would be the third time in history they planted more soybeans than corn.

Ending stocks for the oilseed are expected to be “borderline tight” in 2022-23. There is a little more cushion than corn, but any “slippage” in yield will provide sustained price support for that crop as well.

Globally, there needs to be close-to-perfect growing conditions in the Northern Hemisphere to recharge supplies and alleviate pressing food security concerns in many import-dependent countries.

“It’s hard to imagine, based on recent history of the last five to eight years, that all of the crops are going to simultaneously hit trend yields or better,” said Townsend.

Western Canada could be one of the regions with disappointing yields. Soil moisture conditions are dismal in western Saskatchewan and eastern Alberta heading into spring seeding. Trend-line yields are unlikely.

Canada’s grain, oilseed and pulse stocks coming out of the 2021-22 crop year are expected to be the tightest in three or four decades and less than half of the five-year average.

Ukraine’s exports could be seriously constrained by the ravages of war, so the world is counting on a big Canadian crop.

“We need supply recharge to have the ability to meet a growing demand for Canadian products in 2022-23,” he said.

Canadian canola carryout for 2022-23 looks better than U.S. corn and soybean carryout, but Townsend said that is based on an estimated export program of 7.6 million tonnes.

If yields turn out higher than anticipated, exports could easily increase to as much as 10 million tonnes based on the anticipated robust demand for the crop.

The Western Producer

Tags: U.S., futures, soil moisture, Market, factors, corn, price, prices, crop, yield, stocks