The Ag Journal | 2 Dec

BOM predicts a warm, wet summer, US corn prices tighten in ‘25 and yields are up!

IN THIS EMAIL:

WARM WET SUMMER

US CORN TIGHT IN 2025

FOOD YIELDS CONTINUE TO GROW

WARM WET SUMMER PREDICTED

The BOM’s latest long range forecast suggests that we are headed for above average rainfall over the next 3 months, coupled with above average temperatures. This includes an increased bushfire risk for most of the country, particularly southern Australia. Given the BOM’s recent track record, who knows…

US CORN MARKETS TIGHTEN

As we approach the end of 2024, the agricultural markets have weathered a challenging year of persistent downward trends according to Joe Barker from CHS Hedging.

The United States produced record-breaking corn and soybean yields despite challenging conditions toward the end of the growing season. These harvests have placed downward pressure on pricing, with market values remaining significantly lower than the previous years. A silver lining is strong export demand and renewed profitability across key agricultural sectors including ethanol production, livestock, and poultry.

Current corn futures hover around $4.30 USD, which could potentially rise to the $4.70-$4.80 range by December 2025. This projection offers a glimmer of hope for US growers grappling with mounting financial pressures, particularly increased interest expenses and escalating land costs.

Looking ahead to the 2025 crop, agricultural analysts are closely watching multiple factors. Projections suggest potential corn plantings of 92-93 million acres, with an ambitious yield target of 182 bushels per acre (12t/ha). However, persistent drought conditions and strong competition from South American crops could complicate these expectations.

Agricultural markets remains dynamic, with South American countries like Argentina and Brazil playing significant roles. Argentina has made impressive progress in soybean planting, while Brazilian crops are poised to impact the international market.

Barker's key advice to farmers centers on strategic financial management. With operating notes now carrying an average interest rate of 8.3%, he emphasizes the importance of carefully considering total crop storage, marketing costs and the cost of money.

As US farmers looks toward 2025, the message is clear: adaptability, strategic planning, and a keen understanding of market dynamics will be crucial.

GLOBAL FOOD YIELDS CONTINUE TO GROW

American novelist William Gibson once said, “The future is here, it’s just not evenly distributed” and the same is true in agriculture.

A recent study out of the world bank and the University of Idaho has shown that food production has steadily increased since the 1960’s.

Using a calorific approach to quantifying production, Baffles and Etienne have shown a steady increase in production and yield.

This is at odds with the ‘flatline’ narrative that has been persistent in global agricultural conversations.

Despite this consistent growth in production, the FAO is still estimate that approximately 735 million people worldwide were experiencing chronic hunger in 2022.

Which brings us back to a more pressing and much more difficult conversation around equitable access to nutrition.

The food is here, it’s just not equally distributed.

That’s a wrap,

Have a great Monday!

-ST