As much as the 2023 growing season and following marketing year are highly unlikely to be as wild as 2022, there’s still plenty of unknowns and volatility ahead.
Neil Townsend, analyst with FarmLink Marketing Solutions, says there were definitely head-scratchers in the 2022 season — like when wheat prices shot up, then dropped, then settled lower than expected after the Russian invasion of Ukraine in February. But, ultimately, the volatility that drove prices and the resiliency of the market all made sense.
There’s still plenty of uncertainty to drive markets, including what happens with Chinese demand. “I think the big question mark, what just sitting here on kind of the last 10 days of the calendar year 2022. I mean, you know, China is, is very much an X factor. What is China going to do, say in the first three months of 2023?” he says. Because demand has been relatively steady outside of China, he says, which is more in-line with adding some stability to market price moves.
Farmers are also still waiting to see if some of these price have staying power — a true paradigm shift — or if the markets will drop sharply to the downside and get back to the more recent price movement range.
One advantage the 23-24 marketing year may have is a clearer indication of winners and losers.
“I’m always a believer that every acre is getting planted, it’s just a matter of choosing between wheat, your oils, largely canola, obviously, in Canada, and then, you know, whatever special crops and pulses (work),” he says. The ’23 marketing season will have plenty of potential for profit, Townsend says, but there may be clearer distinctions between the real winners and not-so-winners.
As for the overall trend for the market, Townsend says that ocean freight rates can be ahead of the curve when it comes to direction, and these have dropped substantially in the last few months.
For the full market breakdown with Townsend and Shaun Haney, listen below.:
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