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Market Trends Report – December 2022 & January 2023

US and the World

     As the days of 2022 grow short, farmers are able to truly measure how well this year went and continue to make plans for a successful 2023.  In the United States the crop was a good one, but it was far from record levels as dry pockets throughout the land mitigated big yields in many areas. At the same time huge geopolitical events help shape our marketplace like never before. Wartime markets can do that. This, along with a diminished COVID 19 pandemic will surely shape our world as we continue into 2023.

     On December 9th the USDA released their latest world agricultural supply and demand estimates. (WASDE) Generally speaking, the December report is usually one of the most noneventful of the year and the December 9th report was solidly in that realm. In this report the USDA decreased corn export demand by 75 million bushels from November, which had the effect of raising corn ending stocks to 1.257 billion bushels. Corn production was maintained at a three-year low of 13.930 billion bushels at an average yield of 172.3 bushels per acre. The other big demand factors such as ethanol and feed and residual use were kept the same as the November report, 5.3 billion bushels and 5.275 billion bushels respectively.  Brazil and Argentina’s corn production was the same as last month at 126 million metric tons and 55 million metric tons respectively.

     On the soybean side of the ledger the USDA held fast with the status quo from their November report. The soybean number remains at 4.346 billion bushels with the national average yield of 50.2 bushels per acre. Soybean ending stocks remain at 220 million bushels. Searching hard for information that is different, the USDA actually increased soybean global ending stocks by half a million metric tons to 102.71 million metric tons. This reflected slightly higher stocks in India and Ukraine.  On the wheat side of the ledger USDA peg wheat ending stocks at 571 million bushels which was unchanged from November and the lowest in 15 years. Globally, the USDA reduced global wheat production slightly with the caveat that Australia is looking at an increase in their wheat production this year to 36.6 million metric tons from 34.5 million metric tons last year. Generally speaking, world wheat stocks are at some of their lowest levels in several years.

     On December 9th, corn and wheat futures were lower than the last Market Trends report.  Soybeans were higher.  December 2022 corn futures were at $6.44 a bushel.    The January 2023 soybean futures were at $14.83 a bushel.  The December 2022 Chicago wheat futures closed at $7.34 a bushel. The Minneapolis December 2022 wheat futures closed at $9.12 a bushel with the Sept 2023 contract closing at $8.98 a bushel.

     The nearby oil futures as of December 9th closed at $71.02/barrel down from the nearby futures recorded in the last Market Trends report of $88.96/barrel. The average price for US ethanol in the US was $2.36 a US gallon, down from the $2.53 last month.

     The Canadian dollar noon rate on December 9th, 2022, was .7337 US, down versus the .7475 US reported here in the last Market Trends report. The Bank of Canadas lending rate increased to 4.25%.


    In Ontario, farmers have mostly put the 2022 harvest in the rear-view mirror as of December the 10th. The tremendous weather in October and November and still into December has been one of the best in years and lead to a rapid harvest which challenged logistical storage arrangements in many parts of the province especially eastern Ontario.  Lots of field work was done as the opportunity presented versus past years where wet weather made that more difficult.

     The lower Canadian dollar continues to provide stimulus to Ontario domestic cash grain prices. Basis levels have changed a bit from November.  The corn basis is slightly lower than November.  The soybean basis is higher.    Eastern Ontario corn basis levels are not as high as they usually are compared to southwestern Ontario partly reflecting the big yields, we saw this year in the east.  The final numbers are not in on crop size in Ontario this year but expect a soybean yield of 48 or 49 bushels per acre and a corn yield too come in around 170 bushels per acre.

     The crop size will surely be a surprise to many and not to others. In southwestern Ontario dryness was the word for much of the growing season and that was reflected in much lower yields for some producers in the deep SW Ontario. However, timely rain even a few concessions over made quite a difference.  The potential was there in 2022 for much bigger crop yields on an Ontario basis, but these dry pockets kept it at bay.

     Old crop corn basis levels are $1.00 to $1.45 over the March 2023 corn futures on December 9th across the province.  The new crop corn basis varied from $1.28 to $1.50 over the December 2023 corn futures.  The old crop basis levels for soybeans range from $4.75 cents to $5.02 over the January 2023 futures.  New crop soybeans basis levels range from $4.15-$4.37 over the November 2023 futures.  Ontario SRW wheat prices are in the $8.56 range.   On December 9th the US replacement price for corn was $9.04 /bushel.  You can access all these Ontario grain prices in the marketing section at

The Bottom Line

     2022 has been a pretty good year for crop prices, but now it’s time to turn the corner. We’ve got a whole new year ahead of us with a whole new set of crop numbers. However, the USDA will release its final WASDE estimates on January 12th for 2022 crop year, and this always holds some fireworks for price action. Does a decent crop get bigger or does a smaller than expected crop get smaller?  For any unpriced bushels from 2022 left going into 2023 the January report may represent opportunity.

      Earlier in 2022 after the Russian invasion of Ukraine on February 24th we had the big take off in crop prices. This came after our Covid 19 supply constraint problems, which had pushed crop prices higher. The war in Ukraine was like pouring gasoline on a fire and it is continued to simmer all year. As we head into 2023, it is not over, and the war will continue to represent unfinished business for the agricultural commodity markets. At any time in 2023 a stray missile could make these markets erupt.

     With such high prices you can expect producers around the world to move in to satisfy the demand at these high prices. However, in 2022 there were production problems in North America, Western Europe and even earlier in South America. An argument can be made as we look ahead that the whole world is relying on Brazil and other South American countries to be the breadbasket of the world to bail us out of our apparent production shortfalls.  With the Brazilian set to produce 152 million metric tons of soybeans this coming season, customers like China are lining up.  It goes without saying that good weather in Brazil is important to foster this production and to keep the world from seeing further price spikes in agricultural commodities. If we go off this script even just a little bit, we are likely to see much higher prices.

     China continues to be somewhat of a wild card in world agricultural commodity demand.  Their adherence to a zero COVID policy has met widespread resistance in China itself. Lately, it looks like the government is moving away from the zero Covid policy, which should spur agricultural commodity demand heading into 2023.

Commodity Specific Comments


    Is it possible corn prices fall apart, or will they stay the course?  USDA set corn ending stocks at 1.275 bbu, which should serve as a lever against prices drifting any lower.  There is good demand, and this ending stocks number is very low historically.  Looking ahead, good weather and a good US growing season in 2023 likely is the only way those corn ending stocks increase.

    One facet of corn demand which has been lagging is exports, which are down 48% from a year ago.  At a certain point, even with Brazil corn cheaper, it will be back one of these days.  It won’t necessarily be from China which has struck its own corn agreement with Brazil.  Mexico and other countries will surely need the corn.  However, Mexico and the US are currently in negotiations regarding Mexico’s desire for no more GMO corn imports.  The Americans are threatening to invoke USMCA.  The story will continue.

     The March 2023 corn contract is currently 1.25 cents below the May 2023 corn contract which is a neutral indication of commercial demand.  Seasonally, corn prices tend to peak in early June and bottom out in October.  The nearby March 2023 contract is currently in the 65th percentile of the past 5-year price distribution range. 


       Weather is certainly in the mix when it comes to the soybean price in mid-December and as we go into January. Argentina has been hot and dry, which can be good if you’re planting soybeans, but a continuation of this trend does not bode well for Argentinian soybeans. The market has that dialed in at the moment and South American weather will continue to be a concern.

     Soybean prices are benefiting from the rallies in soybean meal and the buoyant nature of soybean oil. Of course, we must remember that Argentina is the largest exporter of both soybean meal and soybean oil and the weather there continues to concern. $15 soybeans are the resistance level at the present time, but if South American weather gets hotter, we may be breaking above that.

     The January 2023 soybean contract is currently 4 1/2 cents below the March contract which is a neutral to bearish sign of commercial demand.  Seasonally, soybean prices tend to peak in early July and bottom out in early October. The nearby January soybean futures contract is currently in the 70th percentile of the past five-year price distribution range. 


     Wheat prices have dropped over the last month, something which was hard to understand. World wheat stocks are at very tight levels and the US crop needs moisture. In fact, the US winter wheat crop is in very rough shape. You could argue that the speculative funds influenced this market in its downtrend and a correction would likely be in the offing. However, the Australians have had a good crop down under and we know there is a lot of wheat in Russia.  As is, the agreement between Ukraine, Turkey and Russia continues with lots of grain being moved out.

     Statistics Canada is estimating that the Ontario winter wheat crop planted this fall at 1.344 million acres. This is up 44.5% from the 930,300 acres planted in the fall of 2021. This will be the biggest crop in recent Ontario history, the 2007/8 crop came in at 1.275 million acres. This should give wheat producers quite a bit to think about as they go over winter regarding pricing.  A home will have to be found for so much wheat next summer.

The Bottom Line (cont.)

     The Bank of Canada has continued its 2022 policy of increasing interest rates currently set at 4.25%. This should have the effect of raising the value of the Canadian dollar, but it has not this time around. In fact, the Bank of Canada has been following the US Federal Reserve that has increased interest rates as well.  The US dollar has been falling since October, which makes the $0.73 Canadian dollar that much more unique. Usually, it is an inverse to the value of the American dollar. Needless to say, it is added tremendous stimulus to Ontario cash prices and producers will need to watch this as we head into the new year.

     We all know as Ontario farmers the tremendous inflationary aspect apparent in our farm input purchases this past year. The cost of nitrogen for instance more than doubled and fertilizer prices were a lot higher. In fact, general inflation continues to be the focus of the Bank of Canada’s monetary policy.  In many ways it’s hard to imagine these farm input prices being higher in 2023 than they were in 2022. It begs the question, as we look into 2023 will this be the scariest year ever? 

     It’s unlikely, but the circumstances are in place to ask the question.  As farmers, we are risk takers, and we also have risk management tools we use constantly to mitigate that risk. 2023 is just more of that.  There is potential for big price spikes within war markets as we have now. At the same time if we have South American potential coming through and a continuation of grain moving in the Black Sea grain prices could move sideways to lower.  If our Canadian dollar decides to go back into the $0.80 range by the end of 2023 it will make for a long slippery slide for farm revenues from 2021 to 2022 levels.  As it is, 2023 futures prices at the moment should translate into profitable levels.

    As we look ahead 2023 will surely provide some big challenges, not only for Ontario farmers, but for our whole Ontario grain industry. Our big Ontario wheat crop stands out as a potential that can be had when we get the chance to plant it.  The key will be, along with corn and soybeans, to market that crop at profitable levels.  Risk management never grows old.  There is always marketing opportunity around the corner, standing resting marketing orders at the elevator can help in that mission.  As always, daily market intelligence will remain key. Happy New Year to all.