This week marks the start of calculating insurance guarantees for new crop corn and soybean prices using the average February values of November 2021 soybeans and December 2021 corn.
With ending stocks of both very tight, there is an urgent need for a dramatic increase in plantings of both crops.
Perhaps it may be possible to get an expansion of 12 million acres combined as current prices may make seeding some marginal ground profitable even with lower yields while a generally dry subsoil moisture profile in the Upper Midwest suggests field activity will get off to a far earlier start than seen in the springs of 2019 and 2020.
This chart shows the average February price for November soybeans and December corn in $/bushel on the right-hand axis vs. the USDA's March planting intentions figures in 1000 acres on the left-hand axis.
Also reported in the yellow boxes is the average SX/CZ ratio for the month.
We do not know what the average February price for corn and soybeans will be this year but current prices of $4.45 for December 2021 corn and $11.50 for November 2021 soybeans are the highest since 2014 for corn and 2013 for soybeans.
The highest March intentions for corn recently other than the year ago figure, which turned to be 6 million acres too high, was in 2012 with 95.9 mln for the 3/31/2012 intentions report with CZ2012 averaging $5.68, and the following year at 97.3 million acres with an average price in February 2013 of $5.65 when intended acreage was the highest in years at 97.3 million acres.
In fact, from 2011 to 2013, the average February price for December corn was an extraordinarily high $5.78, quite a bit higher than seen today.
Soybean prices were also strong averaging $12.97 but the average soybean/corn ratio at 2.24 was below the considered breakeven point of 2.35-2.40 resulting in increased corn acreage vis-à-vis that of soybeans.
Not sure that will be the case this year as the current new crop bean-corn ratio at 2.58 might be the highest ever as of the beginning of February suggesting beans will see a larger acreage expansion than corn.
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