So, in this article, we will cover more about the impact of the pandemic and the initial projection for the crop in 2023. Moreover, we will also cover the factors that are driving the world maize market in the current year.
While 2023 will soon commence, the report and insights seem quite different for global maize market. According to the US-based research firm, IndexBox, US Maize imports have descended radically and abruptly.
How has the COVID-19 pandemic impacted the global maize market?
With the onset of the pandemic in 2020, the condition for numerous industries has been quite different and worse. But, apart from everything else, the COVID-19 pandemic has also affected the maize market to a great extent. Apart from supply chain disruptions, people faced a shortage of materials along with subcontractors.
Many companies also had to terminate their contracts to keep the expenses under control. However, as everything seems to gain momentum with economic activities across the globe, the corn market will gain traction sooner or later. Companies will later have to understand the various patterns to strategize in a better way.
What was the initial projection for the corn crop in 2023?
In 2023, people observed a decrease in overall crop production and trade due to low supply from Ukraine. According to the estimates in May 2023, the global production is slightly lower than that observed in the previous year. This fact seems evident due to the decline in production in some countries like Ukraine and the US.
Now, if we have to consider the production only in regions across the USA, it is 4.3% lower than the previous year’s yield. Likewise, people will also foresee a reduction of 0.6% for China as the overall volume will reach 271 Mt.
Eventually, the production in locations across Argentina and the European Union will be 3.8% and 3.2% lower than the earlier season. It must also be noted that the production in Ukraine will decrease by 53.7%, while Russia will observe a growth of 1.8%.
Concerning international trade, many people worldwide will observe a slight decrease in corn exports. This will be a significant decrease along with the overall decline in production.
However, the condition will differ when people consider South American regions’ exportable supply. While the cumulative supply can increase by 5.6% in Brazil, it can be around 5% in Argentina. Conversely, the demand in China will tend to reduce by 21.7%, and Vietnam will see a hike in imports by 25%.
What are the various factors that are driving the maize market in 2023?
As we pace ahead to 2023, you will come across numerous factors that are about to drive the global corn market. In fact, if you request someone to speak more about the topmost factors influencing the maize market, it will be impossible to list them.
But, when you observe the market in any year, it entirely depends on the plots of land the US farmers use to cultivate the crop. With this in mind, many analysts state that acreage uncertainty can affect the overall market in the rest of 2023.
As farmers started setting the price, the significantly higher crop-nutrient costs for the forthcoming season were perhaps the reason for the decrease in the plot of land. After considering the above facts, the Vice President of a Brokerage Solution, Bryan Doherty, stated that the uncertainty of gaining inputs could change the planting decision for the crop.
On the other hand, some economists said that the significant change in the corn prices between the current period and the spring could later influence the planting decisions for 2023. Among the other factors, you can also consider the production costs, acreage estimate, and several things. So, let’s take a glimpse through these factors ahead.
All the costs not associated with land have been increasing in Illinois since 2000. But, when the estimate for 2023 was considered, the cost was $677 for every acre of corn. This signifies that the overall cost in 2023 is $70 higher than the earlier cost.
But, as the farmers are using nitrogen fertilizers at a high rate, it is leading to a big difference between corn and soya bean expenses. However, the change in potash and phosphate prices has been proportionate across the vast landscapes. This has later impacted the relative profitability of corn.
As far as the estimate of land is concerned, it is equal to something between 89 million and 90 million acres. But, if people know about the exact figure, then it will be below 90.5 million while considering the average corn acreage across five years. On that note, the fertilizer costs will be a determining factor in driving the corn market.
If the farmers can’t utilize the fertilizers, they will lose plenty of acres. Additionally, while automobile manufacturers struggle to provide transport, the farmers can consider spending on costly fertilizers. However, if the supply of fertilizers is the main concern, farmers will have to plant more crops.
If you come across regions like Mato Grosso do Sul in Brazil, then insufficient water supply can considerably affect the corn crops. Besides, the situation will not be good in Goias as the region will experience less rainfall. This fact will ultimately reduce the overall yield of the crop.
Meanwhile, corn production in Argentina was 49 million mt for MY 2023-22. This production was significantly lower than the past year due to lack of rainfall during the nascent stages of cultivation. However, the overall production in Argentina was 52.5 million mt in MY 2020-21. During the period, the hike in crude oil prices will also lead to an increase in corn prices.
As the year 2023 progresses, China’s demand for corn will be another factor, along with energy prices. But, according to a commodity trader, Patrick Quaid, there’s hardly any difference in the energy prices and the corn demand with the current world taken into account.
However, if the year goes well, it can help make up for the poor returns in the previous years. Hence, farmers must be careful about how much they spend on nitrogen-based fertilizers.
The COVID-19 pandemic has actually affected the global maize market. But, even when people had to go through a lean phase during the pandemic, people observed a drop in corn production. Apart from this fact, international trade will drop slightly when people consider corn exports.
But, there will be numerous factors that will drive the maize market in 2023. In addition to the weather conditions, the market will get affected due to production costs, acreage uncertainty, and many more factors.