War & Weather: Ag economist outlines factors that will influence commodity prices in 2024
While extenuating circumstances are stagnating grain yields across the globe, ag economists see renewable diesel as a major driver of agricultural demand in the coming year.
Wars and weather — that is what AgResource Company sees impacting commodity prices heading into 2024. According to AgResource President Dan Basse, per capita, grain yields across the globe are stagnant.
“That means, if I don’t have more grain produced, I need more acres — and we’re estimating that, in the next five years, the world needs to bring out another 24 million acres into production,” Basse explained. “It’s not going to happen in the U.S. It’s not going to happen to Black Sea because of the war. Principally, it’s all about South America. So, I am concerned more and more about climate. Of course, we saw data just coming out here nearby that indeed September was the warmest month on record. This kind of follows the trend backward, but the oceans which are absorbing all of this extra heat if you will, are now causing the jet stream to be more angular rather than zonal.”
Basse said the trade relationship between the United States and China could also be a contributing factor to commodity prices in the coming year.
“So, if the Chinese, who have recently gone to Brazil and bought a lot of corn; they approved Brazilian corn back last December, and if you look at all the soybeans that they will be taking — China, next year will take 105 million metric tons,” Basse continued. “They will again become a behemoth in the soybean market, and with that in mind, I believe that U.S. soybean farmers could kind of be on the short end of the stick.”
Ag economists see renewable diesel as a major driver of ag demand next year.