2022 Trade Outlook Roundup
Posted on January 6, 2022
Time is precious for all of us, so let's be efficient in 2022. Here's a summary of global trade experts' market outlooks and industry insights for 2022.
Corn exports are expected to be lower than in years past, primarily due to the change in importing from China. Experts say much of the corn pricing in 2022 is linked to the price of fertilizer and the balance that has to be struck with planting corn and fertilizing the fields. This balance is less concerning in the US, than for other countries, but the price of corn will likely fall under $6 a bushel but be above $5. However, if crude oil prices remain high, this could also mean good news for corn prices.
Commodities including energy, gold, natural gas, oil are highlighted in this article. Many commodities saw an uptick in 2021, but 2022 will likely bring hardship due to financial systems phasing out stimulus and uncertainty with many policies and regulations focusing on supply and demand. There will likely be increased inflation due to supply chain issues which will continue to impact the globe, but it is not likely to heavily impact consumer spending.
The supply chain disruptions, they believe, will likely ease in Q2 and into Q3 of 2022. The report cites three main factors that will lead to a reduction in supply chain disruptions. Many countries have ended their pandemic stimulus packages, leaving pocketbooks less full into the future, decreasing consumer demand for goods. Inventories have adapted to the current supply chain conditions and are planning ahead more easily. An increase in container ships will also ease some of the burdens that have plagued the shipping industry as the shipping capacity will expand.
For 2022, Canada still anticipated the US as its largest trading partner but is looking to diversify. The updated NAFTA (USMCA) agreement has helped Canada with clear paths on discipline for violations of the agreement, but the current Prime Minister has taken swift action on trade threats as a means of retaliation which has not been historically typical for the Canadians. The country hopes to grow its automotive industry, but this may be a challenge with so many competitors nearby.
Despite the seemingly never-ending hardships to global shipping this year, with the Suez Canal blockade, labor shortages, hurricanes, and port closures, 2022 may bring some of the same. Learning to adapt and overcome will be an integral part of success in the new year. Their recommendations for a less disruptive 2022 is to get creative, look into different modes of transportation, utilize less-than-container load (LCL) shipping options and consider inland travel if possible. Take the opportunity to engage in more technology and data analytics to assist with supply chain disruptions and increase efficiency. There may also be untapped opportunities closer to home as everyone struggles with the supply chain. Look into suppliers or customers that may be geographically closer than your usual sources.
As global trade stabilized in late 2021, the outlook for 2022 still remains uncertain due to the following factors:
- The speed of economic recovery has varied greatly in 2021, with lower than projected growth in Q3 for many countries. The rising inflation and commodity prices will impact recovery.
- Supply chain disruptions and uncertainty will continue into 2022, along with the semi-conductor shortage
- geopolitical tensions and increased regional trade negotiations are altering trade patterns globally.
- Governmental Trade policies have become increasingly focused on domestic goals. They have also increased scrutiny on environmental impacts, human rights issues, and security.
US agricultural exports are expected to remain high, and 2022 could quite possibly be a record-breaking year for many, including wheat, livestock, poultry, dairy, and ethanol. Soybeans and oilseeds for export are down slightly from the previous predictions. The USDA anticipates export sales to reach $175.5 billion, which is $1.5 billion higher than 2021's estimates. While supply chains issues are still causing backups and bottlenecks, there is some evidence that this is to smooth out in 2022.
YPO surveyed chief executives across 101 countries and 44 industries to provide an outlook on global business for 2022. The majority of their respondents (81%) are optimistic for 2022. Revenue and hiring are increasing for 37% of respondents, but nearly half also say their employment levels are similar to their 2020 numbers. Only 2% of respondents believe that the supply chain issues will resolve in early 2022, with more than 80% of members being very or somewhat concerned about the impact of supply chain issues across all regions. Opinions on if inflation and rising prices of goods and services will happen also seem imminent to most respondents. The survey also highlights trends in working from home policies across the globe and what sectors are traveling again.
As you can see, there is some variation among experts as to when exactly the supply chains will recover in 2022, but most outlooks are optimistic for later in the year. There are high expectations for improvement in several markets, but much of this hinges on the buying power of consumers. Jobs will likely be on the rise, and so will inflation. However, with the easing of supply chains and more hands to help, hopefully, there will be more bright spots in 2022.