Corn, soybean, wheat and cotton prices are expected to remain strong in 2022 thanks to good demand, moderate supplies and weather-related production fears.
Despite skyrocketing input costs - namely fertilizer - good profit potential exists for commodities during the current marketing year and into the next, according to Will Maples, Mississippi State University (MSU) ag economist, and DTN Lead Analyst Todd Hultman. It's a rosy economic outlook for the nation's four most-planted crops.
Commodity prices have rebounded dramatically since the height of worldwide COVID-19 lockdowns in mid-2020. Nearby cotton futures, for example, have almost doubled in price to nearly $1.16 per pound. Still, Hultman and Maples said solid marketing strategies are needed to make the most of sale opportunities.
"Prices are there for pretty decent returns across the board going forward," Maples said. He provided the good news to farmers and ag industry officials during the 2021 MSU Row Crop Short Course in early December on the Starkville, Mississippi, campus. "Keep an eye on exports, which will drive markets over the next few months. When it comes to marketing, if you can pencil in a profit, you need to consider it," he added. "There are a lot of different marketing tools available."
Hultman advised farmers to also pay close attention to drought concerns in parts of Brazil, Argentina and the United States.
Corn, soybean and wheat prices jumped recently due to dwindling soy yields and corn development concerns in South America. In December, March corn was up more than 25 cents per bushel and March soybeans were up nearly $1.13 per bushel. Until the final week of 2021, Kansas City wheat prices were finding support from worsening drought in the Southern Plains where winter wheat is grown. March Kansas City wheat has since fallen to its lowest prices in over two months as demand appears to have softened for hard red winter wheat.
"It's a big concern in 2022," Hultman said of the weather. "Prices can go higher or drop. It can get a little crazy."
Commodity buyers often bid up commodities, trying to get farmers to sell inventories that aren't sold and boost production due, in part, to supply concerns.
EDITOR’S TAKE:
Good news from experts who follow these markets on an on-going basis. The analysis points to another solid year for farmers/ranchers dependent on the weather. Weather is always a factor, but in 2022 it appears to be a major market determinant. The biggest weather concern is drought in key production areas. A break in the drought and favorable growing and harvesting conditions could lead to slightly lower prices. For the time being, however, 2022 is shaping up to be another strong year for the four major commodities and those who produce them. All that said, it should mean another very good year for truck sales to farmers/ranchers. And don’t forget to promote your parts and service to keep their current vehicles up and running.
