Farmers to continue facing high input costs, tight crop margins in 2023

SAN ANTONIO (KTSA News) — Agriculture officials are expecting a challenging marketing environment for crops grown next year.

The central bank hiked rates by half a percentage point on Wednesday, which is less than the recent three-quarters point increases. Fed Chairman Jerome Powell likely is not done raising rates in trying to get inflation down to 2-percent.

“The economic challenges around the world are severe,” said Mark Welch, Ph.D., AgriLife Extension grain marketing economist, told attendees at the Texas Plant Protection Association conference. “Interest rates, inflation are all important factors,” he said. “The Federal Reserve has gotten aggressive (with interest rate hikes). Moving from near zero at the beginning of the year to 4%, increases in the federal funds rate may have dampened overall inflation. The Consumer Price Index that was 9% in June is now down just below 7%. But core inflation, less food and energy, is still stubbornly high, around 5%.”

Regarding corn, on the supply side, world corn production was projected at 46 billion bushels in 2022 with the U.S. accounting for about 14 billion bushels. Texas accounts for about 2% of the U.S. total. World corn production was a record high in 2021 at 48 billion bushels.

The world harvested 543 million acres of wheat last year, which was an increase of 11 million acres over the last three years. In its long-term projections, U.S. Department of Agriculture pegs U.S. corn plantings in 2023 at 92 million acres, up from 88.6 million acres in 2022, Welch said.

“The 2023 U.S. corn yield in that projection from USDA is 181.5 bushels per acre compared to 171.9 bushels in the season just ended,” he said. “Days-on-hand supplies are currently at about 30 days.”

Welch said when days of supply are below 40 days, it results in higher prices. When there is above 40 days supply, prices are typically lower.

Meanwhile, the wheat market is tight, feeling the effects of dry weather as well as economic challenges impacting market prices.