FORT COLLINS, (Colo.): Grain and oilseed markets in 2021 proved just as exciting as in 2020 with prices hitting multiyear highs on shrinking stockpiles. Whether those prices sustain or relax in 2022 will be partially guided by some of the industry mainstays.
Unforeseeable events pop up every year, but market participants over the next 12 months will likely remain focused on top importer China as well as the increasing demand for renewable fuels and the impact on agriculture. The always-crucial US growing season could be a shorter-term aspect.
Those are not dissimilar to the leading topics from a year ago, but global prices are stronger now. Chicago corn, soybean and wheat futures in 2021 all hit their highest levels since 2012-13.
Currently, most-active corn futures are trading about 35% above the year-ago levels, soybeans 4% above, and wheat 30% above. All three ended 2020 on their yearly highs, but prices have eased off the 2021 tops, soybeans by the most at around 24%.
Other topics will be of top importance into 2022, especially escalating inflation. Global shipping costs back in October reached the highest levels since 2008, and although they have fallen significantly since then, they are at 12-year highs for the date.
Relative to demand, global wheat supplies by mid-2022 are projected at all-time lows, so production rebounds for Russia, the United States and Canada will be crucial to rebuild inventory.
US ACRES
US farmers’ 2022 plantings will be a significant factor on prices because the range of acres currently in discussion could easily be the difference between the safe building of supplies and another year of tightness and uncertainty.
There are concerns that US corn acres could plunge on the year due to soaring fertilizer prices, though there are a handful of analysts who see unchanged to higher corn acres in 2022. That sets up a possible surprise in the often-unpredictable intentions report on March 31.
Insurance guarantees will also play a role in the decisions. Those are set by the average price of new-crop futures during February for corn, soybeans and spring wheat. Corn futures do not usually suffer significant losses from mid-December to February, but it is possible if the January reports from the US Department of Agriculture are bearish.
US corn and soybeans’ battle with other acres will be heightened in 2022 by competitors’ strong profitability and a seemingly smaller pool of total acres than in past years.
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