Looking Back on Gro’s Predictions for 2023

At the start of 2023, Gro put together a Watchlist with our predictions for seven major themes for agriculture in the year just ended. 

Today, Gro is looking back at our predictions for 2023 to see what we got right and where we missed the mark during a tumultuous year that saw challenges ranging from extreme drought to weather disruptions exacerbated by El Niño and countries implementing new export restrictions.  

Overall, Gro’s forecasts did exceedingly well — seven out of seven correct.  

Next week we will publish our Watchlist for 2024, with forecasts for food price inflation, core food staple supplies and prices, how El Niño will impact agriculture worldwide, and more in the year ahead.

Gro uses the data and our models in the platform to assess the principal factors that will determine the direction of agricultural markets and inventories and project what 2024 holds in store. 

Here’s Gro’s scorecard for our 2023 predictions: 

What We Got Right 

Food Price Inflation Will Moderate ✓

What we predicted: Price increases for some core food commodities — especially in the US — will ease, at least by the second half of the year.

What we’re seeing: Although protein prices continued to increase in 2023, other food staple prices — including grains, dairy, and fresh produce — did moderate, helping to reduce food price inflation in major economies. In the US, the Gro Food Price Index, part of our Custom Price Index Application, was down by 17% from a year earlier in May. The Index currently is down 4.8% year over year.  

However, food price inflation remains a major problem in countries that depend heavily on food imports and whose currencies have dropped in value against the US dollar. In Egypt, for example, food prices are up 130% since the start of 2020, when global food prices began to rise, according to Gro’s Agricultural Price Inflation Application. For Argentina, food prices have risen by nearly 1700% over that time period, including a sharp jump after the peso was devalued in December. 

Rising Chinese Imports Will Pressure Global Inventories ✓

What we predicted: China’s easing restrictions following the COVID-19 pandemic would result in an increase in import demand for grain, oilseeds, and protein, having a massive impact on global supplies.

What we’re seeing: Chinese imports soared in 2023, and are on track to reach record levels for soybeans and for wheat, following a poor harvest of the grain. That indeed has added pressure on global wheat supplies outside of China, which have fallen to a 15-year low as extreme temperatures and drought damaged crops around the world. However, a record soybean crop out of Brazil saved global soy supplies from tightening significantly.

Fuel vs. Food Competition Will Intensify ✓

What we predicted: US renewable diesel production doubled over the course of 2022, with nearly half of all US soybean oil going into making biofuels. That share will continue to increase as renewable diesel production grows, escalating the competition with food uses of the oilseeds.

What we’re seeing: Renewable diesel capacity in the US continued to expand in 2023, helping to drive up US soybean crush rates and boost soybean oil prices. While soyoil prices are currently down sharply from this time last year, prices are still among the highest in the past decade as biofuel demand for soybean oil is forecast to set yet another record in 2024.

Supplies of Some Staples Will Begin to Recover ✓

What we predicted: Gro forecasted that global inventories of some agricultural commodities — including soybeans, corn, and vegetable oil — would improve in 2023, although wheat stocks would remain under pressure.

What we’re seeing: Brazil’s record 2023 soybean crop came to the rescue of global soy supplies. Corn yields in the country also reached a new high, as seen in Gro’s Brazil Corn Monitor. And production of palm oil, the most popular vegetable oil, also rose. 

Meanwhile, the US also had a bumper corn harvest after the crop overcame early season challenges from extreme heat, pushing US corn ending stocks to the highest level in five years. US soybean ending stocks, however, fell to lows last seen in 2015/16, driven largely by fewer acres planted.

Little Relief Is in Store for Global Wheat Supplies ✓

What we predicted: The world’s wheat inventories will continue a multi-year decline in 2023. However, Russia’s strong wheat production will partially offset shortfalls elsewhere, including the US and Argentina.

What we’re seeing: Global wheat supplies outside of China are at a 15-year low. Extreme heat and drought exacerbated by El Niño drove down wheat production in Ukraine and Argentina. In Argentina, production climbed 20% from 2022, but remained well below the five-year average. Still, wheat prices have been kept in check by abundant exports out of Russia, the world’s top wheat exporter and the cheapest origin for wheat exports.

Fertilizer Expenses Will Take a Bigger Bite Out of Farm Operating Costs ✓

What we predicted: Gro forecasted that global fertilizer prices would drop from their mid-2022 peaks, but remain elevated compared to historical levels in 2023 and beyond, bloating farmer production costs and threatening further cuts to food production in many countries.

What we’re seeing: Bulk fertilizer prices at major origins and destinations declined in 2023 from a year earlier but remain above historical averages. For US corn farmers, the per-acre cost of fertilizer and other input expenses represented 44% of total estimated operating costs in 2023, according to Gro’s US Farmer Profitability & Crop Budgets Application. While that’s down from 48% in 2022, it remains 4 percentage points above the average share of costs from 2015-21.

In Europe, continued high natural gas prices mean nitrogen fertilizer prices also are historically elevated, though below 2022 levels, and nitrogen production rates remain below capacity. Worst hit are countries with devalued currencies, such as Argentina, where fertilizer import costs have soared while import volumes have shrunk.   

Don’t Expect Any Bargains in Protein Prices ✓

What we predicted: Retail prices for beef and pork will remain high through at least the first half of 2023 as supplies decline. With consumers looking for comparative bargains in the poultry aisle, increased demand will also help prop up chicken prices.

What we’re seeing: Beef wholesale prices hit record highs in 2023, as the US cattle population shrank to its lowest level since 2015. Chicken prices, after sliding early in 2023, rebounded in the second half as producers slowed production — and prices ended the year flat to slightly higher.  

However, wholesale pork prices bucked the trend. Modest growth in the size of the US hog herd pushed down wholesale prices by about 15%, with retail prices lately also starting to move lower.