2024 Farmer Wish:We need price volatility to return!
The 2022 crop was one of the most profitable in recent history. 2023 margins will be much more modest. The prospect for 2024 is not looking much brighter: high cost of production, relatively low prices and poor planting conditions will probably impact further upon the profitability of your farm. However, the game is not yet over and your output value is certainly the variable that could most positively impact your production margins. For that, we need markets to become more volatile!
Let’s be clear: volatility is an opportunity for higher farm revenues. By joining ODA, farmers raise their interest in making informed decisions and to take control of their selling prices. You become part of the proactive farmers who understand that farming is a business that does not only rely on agronomy, machinery, weather, or subsidies alone. You join us to better understand your sales decisions and consequently improve your final price and your farm profitability. For that, we need markets to become more volatile!
So where could volatility come from? What will trigger first, weather or geopolitics?
For now, 2024 is starting like 2023 ended: the bearish sentiment prevails and markets will need a relatively strong event to come out of the lows. Brazil remains the main watch point for feed markets and cheap Black Sea supplies continue to benchmark the wheat prices. Wars are currently ignored but will probably continue to represent an underlying risk. Macros will play a major role with crude oil and currency rates being very reactive to geopolitics, interest rate policy changes and economic data.
Our scenario in a very unpredictable world is that we should have some small and short-term selling opportunities in January and February. These opportunities could come from a lower-than-expected crop in Brazil (Soya, Corn), from a decision by India to import (Wheat) or from the current escalating situation in the Black Sea. Here, the (potential) Kerch bridge destruction could be a real trigger for a short-term price rebound.
Later in the season, prices will start to be more influenced by new crop fundamentals and the spring planting season will most likely be a source of high volatility again.
In a year of lower margins, your crops final price will make the difference. Even if the last few months have been depressing, we know from recent market history, how fast can things change... So, let’s be reactive and catch the opportunities when they will arise.
You want to improve your market knowledge and make informed decisions in 2024 to improve your farm resilience? You are welcome to join the ODA UK community of farmers.
We wish you all a Happy New Year and we wish the market a Volatile New Year!
Sébastien, Gary, Jeremy, Rebecca - ODA UK TEAM.
sebastien.mallet@oda-agri.com
Main Office: +44 1223 894 791
Mobile: +33 6 82 83 71 87