Market prices for U.S. corn, soy, wheat and cotton will retreat sharply in the 2023-24 marketing year with normal weather and yields around the world, FAPRI said in an update to its agricultural baseline. However, it expects record wheat and cotton prices in 2022-23.
“The war in Ukraine and weather‐reduced crop supplies have contributed to higher prices for many agricultural commodities, while higher prices for fertilizer, fuel and other inputs have increased farm production expenses,” it said in the report released Tuesday. “Projected prices for a range of farm commodities and farm inputs are expected to decline in the years ahead but nominal prices remain high by historical standards.”
The FAPRI update assumes war “continues to limit Ukraine’s production and trade in the year ahead, before an eventual return to normalcy.”
Tight global supplies will result in record prices for wheat and cotton and near‐record prices for corn and soybeans for the 2022-23 marketing year. Wheat prices are projected to exceed $9 per bushel, corn more than $6 per bushel, soybean prices more than $14 per bushel and cotton prices will average 96 cents per pound.
If better growing conditions result in better crop yields in 2023 and later years, crop prices should decline. In 2023-24, FAPRI projected average corn prices to drop to $5.22 per bushel, wheat to $7.11 per bushel and soybean prices to $12.36 per bushel.
It also said renewable diesel production could overtake traditional biodiesel as early as 2023, and tax credit provisions in the Inflation Reduction Act could lead to a modest expansion of sustainable aviation fuel production. Demand for biofuels, including corn, will soften in longer term as motor fuel use weakens.
U.S. meat production is also expected to be flat in 2022 and 2023 due to higher feed costs, says the FAPRI update. It’s the first time since 2003 and 2004 that meat production failed to increase for two years in a row.
Although commodity prices would fall, FAPRI also said production costs also will moderate in 2023 and beyond compared to this year’s high levels.