Dr. Ken Rietz
December 7, 2023
The agricultural news feed has been obsessed with #COP28 this week; it is hard to find anything else. This is understandable since one of the biggest factors in growing crops is the weather, including climate change. But since the conference lasts until December 12, commenting on the results of the conference is futile right now. So, I have decided to instead summarize the USDA projections for next year for wheat and corn, in the categories of production, trade, consumption, stockpile levels, and prices. This should be of benefit for those planning for next year. Then I will wrap up with an extended look at the likely effects of the current El Niño.
Wheat
Figure 1: Annual US wheat production, units of 1000 metric tonnes
The USDA estimates that next year’s US production of wheat should be similar to this year’s, but global production ought to be down a bit from this year’s record high. Similarly, global trade in wheat will likely also be slightly down from this year’s record high. Global consumption should be somewhat higher next year. Global stockpiles should increase some from their lowest levels since 2015. And global prices for wheat, and therefore futures, should continue to edge downward, continuing a year-long trend.
Corn
Figure 2: Annual US corn production, units of 1000 metric tonnes
The USDA estimates that next year’s US and global corn production will both be quite a bit higher, and both imports and exports globally will increase as well. Consumption of corn is expected to increase also, and stockpiles of corn should increase. With the increased supply outstripping demand, the prices of corn, and therefore corn futures, are expected to drop in the US and globally.
Weather
Climate.gov has published an examination of the El Niño, which emerged in June of 2023, and assessed how it is likely to affect the US weather before it fades away. While not an official publication, the authors are doctorates in meteorology or senior members of NOAA, and their blog ENSO (El El Niño/Southern Oscillation) has been running on climate.gov for more than 10 years. Their analysis is based on the 29 El Niño events since 1950.
The current El Niño showed 1.5◦C above average temperature of the surface waters of the western Pacific Ocean from August to October, which earned it the description of strong. There is a 1-in-3 chance of it strengthening to very strong. The strength of the El Niño is the gauge of how likely the characteristic changes are. The typical El Niño wind patterns have already appeared, and reinforce that the El Niño has fully engaged now. The estimate is that El Niño will still be around until at least March 2024, and possibly through the summer of 2024.
It is easy to think that a stronger El Niño means more extreme temperatures or precipitation events, but that is not the case. A stronger El Niño only increases the likelihood of those events, but not how severe they are.
The effects of El Niño on winter weather in North America are not very extreme, either in temperature or precipitation. Most of Canada and down into northwestern US may have warmer winters and most of the rest of the US may have cooler winters. California down to New Mexico and around up to Kansas are drier than usual, as are Mississippi around the coast to Virginia. The rest of the country will be wetter than usual, and this includes much of the area where grain grows.
The effects of El Niño on summer weather are also usually quite mild in North America, except along the California coast, where the temperatures can get considerably hotter. There is little effect on rainfall over much of the US. That is not to say that the effects of El Niño are mild in other parts of the world; they certainly can be very serious. So, the effect of El Niño should be fairly moderate in the US all this coming year. The result on grain futures again would be downward in the light of better production conditions and higher yields, and therefore higher supply.