Economic outlook kicks off Innovation to Profit Conference
March 3, 2022 | Joseph Hopper
A crowd of more than 150 gathered inside the FFA Enrichment Center last week for the opening panel of the Iowa Soybean Association’s 2022 Innovation to Profit Conference. Matt Erickson, ag economic and policy advisor for Farm Credit Services of America, gave a bird’s eye view of the economy and agriculture at large.
Erickson says despite inflation worries, the economy is still red hot. The unemployment rate in America, which jumped to more than 8% in the spring of 2020, is at 4% today and nearing the pre-pandemic level of 3.5% seen in February 2020. While he suggested the market is currently expecting multiple interest rate hikes in 2022 from the Federal Reserve, strong demand is also expected to continue in the United States in 2022.
“Right now, I don’t see any indication from the market that we’re heading toward a recession,” says Erickson. “However, I would expect the Fed to be cautiously aggressive in their approach to interest rate hikes.”
Many current headlines in agriculture will factor into 2022 and beyond. South America, the Russia/Ukraine situation, Asia, fertilizer prices, land values and soy oil optimism will all play a role. Erickson told the crowd one of the biggest “no brainers” for farmers in 2022 is to be proactive when managing revenue.
“Think about what 2023 will bring: fertilizer costs, seed costs,” Erickson says.
Key soybean predictions:
· Commodity prices overshadow interest rate hikes in 2022
“2023, that’s a question mark,” Erickson says. “That’s something we need to think about.”
· Soybean stocks remain tight, regardless of Brazil’s crop
“Looking at 2023, South America has had consecutive years of drought,” Erickson says. “Are you banking on another? La Nina can turn around really quickly. It’s something to think about.
He added, “I would expect basis to strengthen over the summer months for soybeans. Once we get more old crop out, that’s going to reduce some of the ending stocks here.”
· Corn and soybeans are set for a big acre battle
“I think the March prospective planting report is going to be a big report,” Erickson says.