There’s plenty of uncertainty in 2023 grain markets. The potential for big corn and soybean acres combined with weak economic performance could push prices lower as the year unfolds.
But there’s still plenty of profit opportunity, says AgMarket.Net co-founder Jim McCormick. He shared his take on the markets while participating in a market panel at the Grain Famers of Ontario March Classic earlier this week. The key, he told farmers, is to take a hard look at break-even costs and market for profit, not price.
In his remarks, McCormick noted that there are many factors weighing on the market — from a huge Russian crop that has now hit the export market to the status of the Black Sea grain deal that allows grain to flow out of Ukraine, to a jittery banking sector dealing with lender failures. There’s also China buying activity, the status of crop carryouts and a highly anticipated USDA planting intentions report.
“Right now we’re looking for more corn acres getting planted. I think a lot of people are just shy of the 91 million acres of corn, maybe around 88 million acres of beans,” says McCormick. “The extra corn, plain and simple, is where it’s profitable for most producers. It doesn’t matter if you’re in the southern part of the country, all the way up to the Canadian border to the Rocky Mountains, all the way over to the east coast, corn is where the profitability is.”
If all that corn gets planted and the U.S. harvests a strong trend line yield, carryout will build and that’s bad news for prices, says McCormick. But he reminds growers, however, that the USDA report is just a survey of farm planting anticipations.
“We haven’t planted yet,” says McCormick. “The Northern Plains have gotten walloped with a lot of snow, and a lot of snow recently, so you’re now getting a few more people talking the risk of Prevent Plant, so we’ll see what happens. Ninety one is the talked acre — what actually gets planted? Mother Nature will have the final say.”
If planting estimates prove accurate, corn could take a tumble, says McCormick.
“Well right now, I think it would be five ($5.00). That trend yield is about 181 and a half [bu/ac]. And we haven’t hit trend yield yet for our country here in the United States in a long, long time. But if you look at the state I’m from, Illinois, they had phenomenal yields, they had great yields, some of the best crops they’ve ever grown,” says McCormick. “If you would take that kind of yield and plug it into maybe Iowa, Minnesota, some of the other bigger corn states, with 91 million acres being planted, you are probably going to see prices closer to five when it’s all said and done.”
Listen to RealAgriculture’s Bernard Tobin and AgMarket.Net’s Jim McCormick discuss the markets at Grain Famers of Ontario March Classic. (Story continues after the interview.)
With lower prices likely, McCormick is telling farmers to focus on profitability for 2023. “A lot of people get caught up on the price, especially when prices are lower than they were the year before. And the human nature is I can’t sell corn at a lower price than I sold a year before. Our argument is you want to get away from that — last year was last year.”
McCormick says growers have to ask themselves: “Are you profitable?… With good yields at current prices a lot of people still can lock in some very good break-evens. And when you look at just the uncertainty in the world, a big crop, big acres, weak economic situation, not just here in the United States, but a weak economic situation in China, the price will more than likely go lower.
“You don’t want to let these profit potentials slip away from your fingers because you waited for the ‘what if.’ Right now we’re saying the ‘what if’ is what if it doesn’t go in your direction? So go ahead and lock in those profits if you got ’em,” says McCormick.