There is growing caution among analysts on where markets will land at and after harvest 2023, as some inflation pressures ease and prices drop. Input prices have pulled back, too, but for those who may still need to price product, the clock is ticking.
Kevin McNew, vice president of research and chief economist for Farmers Business Network (FBN), spoke with RealAgriculture founder Shaun Haney about the new normal for input and commodity prices while at Commodity Classic last week.
McNew says, in comparison to last spring, inflation pressures have come down and commodity prices have as well. He says commodities are likely not going to drop much more before harvest. Factors contributing to the lack of further commodity price drop is the crop losses in South America, sustained acreage number in Canada and the United States, and coming into second year of the Ukraine-Russian war and a lack of Ukrainian supply entering the world market. (story continues below)
Input prices are starting to normalize in the U.S. and Canada, and natural gas and nitrogen-based fertilizer prices have both come down, though prices are still above the level from a couple years ago. He says crop protection prices are also dropping, though still above where they were in 2021. McNew says the drops of input prices may be a silver lining for farmer’s profitability in 2023.
McNew says that the response from North American farmers is that they are a little behind on chemical purchasing for 2023. He says that this is driven by the expectation that chemical prices will continue to drop, but the reality is that those prices will not move much further down by the time the product is needed at the farm. McNew says that if a farmer has been sitting on their hands it is probably time to start buying to shore up any input needs.
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