WESTERN PRODUCER — There’s nothing like missiles and drones being shot down over the Red Sea while streaking toward cargo ships to shake up the 2024 forecasts.
But that’s the world we’re living in for this new year. Prognosticators’ markets, commodities and economic forecasts can be summed up as mostly dull, with a chance for explosions.
For both crop and livestock producers, 2023 was disappointing, with prices slumping deep since mid-summer. Canola futures have fallen by about $200 per tonne, or a quarter. Hog futures have been grinding lower since summer.
“Good News for the U.S. Pork Industry: It Can’t Be Worse in 2024,” is how a headline on Ag Web summed up the situation.
The depth of the declines and the strength of the downtrend knocked the confidence out of a lot of farmers looking toward the 2024 growing season, but anything could happen.
If the consensus of prognosticators is right, the world will experience something between a light recession and weak growth. That doesn’t set up either a bull or a bear market in commodities, including agriculture.
Inflation is expected to fall further but not quickly hit the two percent most central bankers want. Some interest rate cuts are likely, with bank credit becoming cheaper in the second half of 2024.
However, as with the Houthi missiles messing up Red Sea shipping over the holidays, wild cards can show up. With wars in Eastern Europe and the Middle East, the world is hardly in a Goldilocks situation. The pandemic is past but the unravelling of the globalized economy and free-flowing trade has carried on.
There will be weather. There always is.
Europe is already in recession, but the United States has avoided falling into one. China’s in an economic funk. Could something dramatic happen in any of those mega-economies? Of course.
I looked at more than a dozen global commodity and economic outlooks from major international banks. I didn’t find anybody predicting anything dramatic. Could that be a contrarian indicator that something big is likely to happen, since nobody is expecting it?
As we grind toward spring seeding, we’ll hear dozens of crop and livestock market outlooks. We’ll provide you with a good array of them here in the Markets pages of The Western Producer.
We trudge into 2024 with prices that make many of us glum, but as always, the answer for low prices is low prices, so perhaps we’re treading ever closer to a rebound.
As that headline said about pork, let’s embrace the idea that 2024 won’t be worse than 2023. From that low base of expectations, it could turn out to be a surprisingly good year.
