Fundamentally Speaking

The USDA will release a slew of reports that no doubt will have a major impact on prices January 12.

After that, the most influential set of numbers will be announced at the USDA annual Agricultural Outlook Forum February 19-20th with keen interest on what the department estimates for 2015 U.S. corn and soybean planted acreage.

Based on a relatively high, albeit slipping November 2015 soybean-December corn price ratio, greater prospective net returns for soybeans on a per acre basis than corn, and still high input costs for planting corn it is expected that soybean acreage will increase at the expense of corn.

Keep in mind that strong corn prices in recent years, helped immensely by the large amount now consumed by the ethanol industry has boosted corn acreage relative to soybean area with many operators abandoning their traditional crop rotation system in favor of continuous corn.

The accompanying graphic shows the average corn-soybean planted ratio for three time periods; 1995-2014, 2005-2014, and 2010-2014 in columns with the purple line denoting just the 2014 ratio for the top 15 corn and soybean producing states.

In the core Midwest states such as IL, IN, IA, MI, MN, MO and OH the corn-soybean planted ratio increases from the 20 year average to the 10 year average and finally to the five year average though in all cases the 2014 ratio was lower, reversing the trend of increased corn acreage relative to planted soybean area.

For other states such as K and KY soybeans have gained on corn area in the most recent five year period, perhaps reflecting the improved yield performance of shorter season soybean hybrids seen in recent seasons.

In some of the more northern states bean area has gained on corn though that could be linked to cold and wet spring over the past few years that resulted in some intended corn acreage being switched to soybeans.

The bottom line is that for only the second time in history (1983 though that was the payment in kind year) U.S. soybean planted area seems likely to exceed corn planted acreage this coming year.

(KA)