After a couple of years of generally strong prices, 2023 was a year to forget for the major crop futures markets.
As the charts below show, corn, soybeans and the benchmark Chicago wheat futures are all finishing the year on a much weaker note compared to where they started it. The Kansas City and Minneapolis wheat markets were also losers on the year, as was canola.
The drop in corn was particularly noteworthy, as that market tends to set the pace for all other crops. Trading at over US$6.50/bu to begin the year, corn lost about 30% of its value amid a record large American crop of 15.2 billion bu, up 11% on the year. US corn ending stocks for 2023-24 are projected up 770 million bu or more than 56%. According to a Reuters report, the annual drop of 30% was the largest for corn in a decade.
Soybeans lost around 14%, pressured by expectations of big South American production. Although the market did get a lift from early concerns about dryness in parts of Brazil, recent rainfall has sent prices lower again. Meanwhile, conditions in Argentina are much improved over last year’s drought disaster. Combined Brazil-Argentina soybean production for this year is currently estimated by the USDA at 209 million tonnes, up 24 million or about 13% from a year earlier.
For soybeans, this year marks the first annual decline in five years and the biggest since 2015, Reuters said.
The Chicago wheat market tumbled more than 20% on the year, mostly undermined by large and lower-priced supplies out of Russia, the world’s No. 1 exporter. Russia wheat exports for 2023-24 are estimated at a new record high of 50 million tonnes, compared to less than 20 million for the US and 23.5 million for Canada. Continued exports out of war-torn Ukraine added to the downside in wheat.
Wheat prices did get a boost for a spate of large purchases by China, with that country making its biggest buy of US wheat – all of it Soft Red Winter - in more than four years earlier this month.
As shown here, the Kansas City Hard Red Winter and Minneapolis spring wheat markets lost significant ground during the year as well.
Despite major drought in parts of Western Canada this summer, canola futures lost more than one quarter of their value in 2023, undermined by a surprisingly resilient national production and weak export demand to date, particularly from China.
