Fundamentally Speaking

Current SX2023/CZ2023 Ratio Seems to Confirm Early USDA Projections

Joel Karlin
By  Joel Karlin , DTN Contributing Analyst
Chart by Joel Karlin, DTN Contributing Analyst

USDA released the U.S. focused portion of the USDA Agricultural Projections to 2032 report on November 7, 2022, with the complete report due to be released in February 2023.

The projections reflect a composite of model results and judgment-based analyses and were prepared during August through October 2022 and used as a starting point for the short-term forecasts from the October 12, 2022, WASDE report.

Noting that USDA is looking for 2023 U.S. corn planted acreage to come in at 92.0 million acres which would be up quite a bit from the 88.6 million seeded this past season, while their projected 2023 U.S. soybean planted area at 87 million acres would be down 500,000 acres from what was put in the ground for 2022.

Interestingly a year ago USDA also pegged corn area at 92 million and soybeans at 87.5 million for the 2022 season, so they were right on for soybeans but too high for corn.

As we have done on a number of occasions this time of year, this graphic shows the new crop November soybean/December corn ratio the day before Thanksgiving on the right-hand axis vs. the change in both corn and soybean acreage from the final planted figure the prior year to the following March planting intentions figure on the left-hand axis.

As an example, the day before Thanksgiving last year the November 2022 soybean/December 2022 corn ratio closed at 2.24 which is below the 20-year average of 2.35, the 10-year average of 2.42 and even the five-year average of 2.36.

A general rule of thumb is the average ratio has been 2.37 and a figure over that tends to encourage soybean plantings over corn and a ratio below 2.37 is generally seen as more favorable for corn as opposed to soybean seedings.

Keep in mind that there is quite a bit of time from Thanksgiving to late winter when farmers start to finalize their planting intentions.

The absolute level of prices can be important also as high prices for both commodities regardless of the ratio could prompt increased seedings of both.

The current SX2023/CZ 2023 ratio of 2.27, which is the second lowest SX/CZ ratio at Thanksgiving since 2013, favors more corn area relative to soybeans, but again the influence of input expenditures particularly with fertilizer will have a large bearing on which crop if any gets the short end of the stick in the upcoming "acreage battle".

Such was the case last year where a 2.24 soybean/corn ratio ostensibly should have resulted in more corn and less soybeans, especially since the SX2022/CZ 2022 ratio continued to fall all the way through the end of March 2022.

By the time the 3/31/2022 planting intentions was reached, the SX2022/CZ 2022 ratio was a very low 2.04, even more in favor of corn, yet the 89.49 million prospective corn acreage figure was off 4.0% from the final 2021 corn seedings figure of 93.25 million.

The 2022 March soybean intentions of 90.96 million was up 4.3% from the final 2021 soybean seedings figure of 87.20 million acres, though a very wet and cold 2022 spring in many of the northern states resulted in a final 2022 soybean acreage of 87.45 million, about 3.5 million below the prospective plantings projection.


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