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Turner's Take Ag Markets | IMF Estimates Slow Growth and Possible Recession for 2023

By: Craig Turner, Senior Risk Management Consultant

Turner's Take Ag Markets
 
Craig Turner
Senior Risk Management Consultant
Turner's Take Podcast

MACRO MARKETS | The IMF cut its global growth forecast for 2023.  They see the US, China, and EU with lower economic growth and possible recession in 2023.  The IMF agrees with central banks that inflation is the #1 priority but they warn if interest rates increases are too aggressive the world could head into a deep recession.  

 

GRAINS | Wheat and corn are backing off a bit after yesterday's rally.  Russia is now in the second day of missile strikes against Ukraine as the war escalated dramatically over the weekend.  Ukraine has asked the G-7 leaders for air defense weapons as a result of the missile attacks.

The UN is calling for faster or reduced inspections at the joint coordination center in Istanbul, which now has a backlog of 100 ships totaling 2.1 million tonnes of grain.  Grains are getting out of the Black Sea but it is taking time.  Russia's Deputy Prim Minister said they are considering suspending their grain export quote due to the massive 2022 wheat harvest.  As long as the UN, Ukraine, Russia, and Turkey can continue to work on getting grain and hopefully fertilizer out of the Black Sea, prices likely grain lower into next year and 2023.

The USDA's October WASDE will be released tomorrow.  We are looking for a corn yield of 172 and soybeans around 50.5.  This will be the last major supply side updated until January. Once supply is set the market will turn its attention to demand.  A slowing global economy, Chinese lockdowns, the Black Sea war, high inflation/interest rates, and the high USD all point to lower demand.  

Wheat likely holds elevated prices while the world keeps risk premium in the market due to the Black Sea war.  Corn demand estimates are likely to fall over the next few months by at least a couple hundred million bushels.

 

OILSEEDS | Brazilian farmers are keeping pace with planting but Argentina remains dry. The good news for Arg farmers is La Nina has most likely peaked and should fade rapidly.  Arg could get a lot better rain events in late Oct and November.  They will still have very dry conditions for the next few weeks but according to the latest forecasts their drought may be coming to an end sooner rather than later.  Some weather services are calling for an El Nino to develop at the end of 2022 and into 2023, which is generally favorable overall for global crop production.

 Craig Turner
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craig.turner@stonex.com
@Turners_Take
 
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