Limited food stocks will support price spikes

Adverse weather conditions, higher energy prices, and a shifting geopolitical environment may have a negative impact on global agricultural production in 2023. So, lower supplies are expected, even though farmers are expanding planted areas. 

Recent flooding in Australia, the world's second-largest wheat exporter, caused significant crop losses. Meanwhile, a severe drought in Argentina could reduce the country's cereal production by 40%. 

The outlook for corn and soybeans in early 2023 seems to be more optimistic. Prior to that, drought in some regions of Brazil raised concerns, since Brazil is known as the leading exporter of beans. 

Domestic inventories of major crops, including corn, soybeans, and wheat, continue to be tight, the U.S. Department of Agriculture said. The agency reported that domestic corn stocks are likely to hit a decade low ahead of the 2023 harvest. U.S. soybean stocks are also at a seven-year low. Wheat stocks, meanwhile, are expected to be at their lowest level in 15 years.