Market review 2022 – 2023

WHILE THE CORN, soybean, and wheat prices for the 2022 – 23 crop marketing year retreated from the lofty highs of 2021 – 22, they were still well ahead of the previous five-year average. The significant market drivers included the outlook for a larger corn crop in the U.S., increased soybean production in Brazil and the war in Ukraine.

CORN

The average Chicago cash price in 2022 – 23 was $6.21, lower than the previous year’s average of $6.46 but $1.67 above the previous five-year average of $4.54. The highest closing price in Chicago was $6.98 on October 10, October 13, and November 1, 2022.

The average Chatham-Kent high cash price of $7.62 was lower than the 2021 – 22 average of $7.96 and higher than the previous five-year average of $5.87.

The nearby corn future traded between $6.60 to $6.98 for most of the early part of the marketing year. The prices eased in February following the United States Department of Agriculture’s (USDA) annual Outlook Forum. The USDA estimated 2023 corn plantings at 91 million acres, up from 88.6 million the previous year. Production was forecast at 15.085 billion bushels, based on a record-high yield of 181.5 bushels per acre.

After working their way back to $6.60, the corn futures suffered a setback in May. Favourable weather for planting and a series of cancellations by private exporters for U.S. corn destined for China weighed on the market, dropping the price to $5.55 on May 19.

A weather rally helped the prices gain ground again as concerns over dry conditions lifted the prices over the next few weeks, reaching $6.71 on June 21.

However, forecasts for much-needed rain and a surprising acreage report from the USDA knocked the closing price down to $4.89 on June 30. Corn prices tumbled as the USDA pegged the U.S. corn acreage at 94.1 million acres, up two million from the March estimate.

SOYBEANS

The average closing old crop soybean price in Chicago in 2022 – 23 was $14.22, down slightly from the previous year’s average of $14.56. The previous five-year average was $11.01. The highest closing price in Chicago was $15.44 on February 21, 2023.

The average Chatham-Kent high cash price for 2022 – 23 was $19.08, up 47 cents from the 2021 – 22 average of $18.61 and well above the previous five-year average of $13.91.

Concerns over hot and dry weather in Argentina buoyed soybean futures in the first two months of 2023. After peaking in February, the prices declined over the next few weeks amid economic worries fuelled by the U.S. banking crisis that caused three major lenders to collapse. Expectations for a record crop in Brazil applied further pressure, dropping the price below $14.00 on June 23.

The nearby future prices struggled during May, losing more than $2.00 per bushel by the end of the month. A good planting pace in the U.S., weakness in the crude oil and equity markets, and a two-month extension of the deal to allow Ukraine to ship grain through the Black Sea corridor weighed on the prices.

The market recouped the losses in June as forecasts for dry weather and improvement in the crude oil market drove the prices higher. Further support came from the USDA’s June 30 acreage report, with the department slashing its soybean estimate by four million acres to 83.5 million. The bullish factors helped the nearby future to close at approximately $14.68 on July 3.

WHEAT

The average Chicago cash price for wheat in 2022-23 was $7.43, lower than the 2021 – 22 average of $8.76 and approximately $1.46 higher than the previous five-year average of $5.97. The high price for the nearby future was $9.38 on October 10, 2022.

Concerns over the war in Ukraine supported the market in October 2022, with Russia indicating it was ready to reject the renewal of a Black Sea corridor agreement in November. Dry weather in the U.S. Plains also contributed to the rise.

The impact of the geo-political events was on full display in early November 2022 as Russia suddenly reversed its position on the corridor deal. On November 2, wheat prices plummeted by 57 cents, with the nearby future settling at $8.46.

While the war in Ukraine continued to dominate the market talk through the rest of the year, issues including lower demand for higher-priced U.S. wheat, a large harvest in Russia and fears of a global recession weighed on the market. Meanwhile, larger-than-expected wheat acres in the Prairie provinces contributed to the downward move in late June 2023. Statistics Canada reported that farmers planted 19.5 million acres of spring wheat, up eight per cent from 2022. Winter wheat, grown predominantly in eastern Canada, increased by 20 per cent to 1.4 million acres.

As for Ontario prices by class, the average Soft Red Winter Wheat price in the Chatham area was $8.73, down $1.28 from the previous year’s average of $10.01 and $1.55 above the previous five-year average of $7.18.

The average Soft White Winter Wheat price in the Chatham area was $10.84, up 62 cents from the previous year’s average of $10.22 and up $3.54 from the five-year average of $7.30.

For Hard Red Winter Wheat (HRW), prices in the Chatham area averaged $9.92, down 65 cents from 2021 – 22 and $2.44 above the previous five-year average of $7.48. The prices for HRW do not include premiums.

The average closing prices in Minneapolis for Hard Red Spring Wheat averaged $8.94 in 2022 – 23, down $1.33 from the previous year’s average of $10.27 and $2.21 above the previous year’s average of $6.73.

The highest closing price in Minneapolis was $10.14 on October 10, 2022.

Ontario prices (not including premiums) tracked by Farm Market News averaged $10.67 in 2022 – 23, down by 89 cents from the previous year and up $3.08 from the previous five-year average of $7.59.

Blair Andrews is the editor of Farm Market News, University of Guelph, Ridgetown Campus. He reports grain prices weekly in Grain Farmers of Ontario’s GrainTALK e-newsletter. •