The headline of my column that ran in the Jan. 17 paper last year was: U.S. recession threat only cloud on the horizon.
As we now know, that cloud turned into a hurricane.
The economic slowdown has swept from the United States to Canada, Europe, China and beyond, sapping demand for almost everything, including agricultural products.
A common comment about recession worries a year ago that is still repeated today is that agricultural commodity markets should hold up better than most because, regardless of how well the economy is doing, people have to eat.
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China purchased just over 20 million tonnes of wheat, corn, barley and sorghum last year, that is well below the 60 million tonnes purchased in 2021-22.
There is truth in that, but it is also true that people can economize on their diet by focusing on basic food and eating less high-end items such as meat.
Except for livestock raised completely on pasture, it takes several kilograms of grain to produce one kg of meat, so a reduction in meat demand hits grain consumption.
The worsening global economy and growing ranks of the unemployed mean there will be more people opting, or being forced, to include more meatless days in their weekly diets.
The U.S. Department of Agriculture put numbers to this trend of reduced demand in reports released Jan. 12.
Because of reduced demand for ethanol, feed and seed, U.S. corn use was cut to 10.2 billion bushels, a drop of 185 million bu. from the December report.
USDA’s corn export outlook was cut by 50 million bu. to 1.75 billion.
The department also cut its wheat domestic consumption and its soybean domestic crushing numbers.
USDA also said domestic production of corn and soybeans were a little higher than in the last report.
The larger crops and weaker demand caused USDA to increase its estimate of the year-end stocks for corn, soybeans and wheat.
That news overwhelmed a price-positive U.S. winter wheat acreage forecast, which was lower than analysts had expected.
Also negative for prices was USDA’s assessment of crop production in other countries.
Since Christmas we have heard a lot about how dry it is in Argentina, and USDA did shave its expectation of that country’s coarse grain production, mostly corn, to 23 million tonnes from 24.5 million.
However, that was lost in gains in China’s output. USDA put Chinese coarse grain production at 173.1 million tonnes, up from 167.6 million in December. USDA does not think a lot of that will hit world markets, but it will increase China’s stocks and means it is unlikely to import corn.
USDA reduced its Argentine soybean production forecast to 49.5 million tonnes from 50.5 million last month, but that was offset by a one million tonne increase in U.S. soy production.
