Fundamentally Speaking

As noted in prior posts, row crop markets are starting to focus a little attention on the upcoming growing season ahead of the USDA's annual Ag Outlook Forum where they will give their first estimates for the 2024/25 U.S. corn, soybean and wheat planted acreage and demand-supply figures.

Some early acreage projections from S&P Global and Farm Futures seems to confirm general talk that U.S. farmers will switch a fairly substantial portion of their corn planted area over soybeans, though the exact numbers still up in the air.

Though the current 2024 November soybean/December corn price ratio and some university return per acre scenarios for various crops do point to enlarged soybean seedings at the expense of corn, we have heard about very good post-harvest fertilizer application conditions that could favor corn, along with the general sentiment that Midwest farmers just love to plant corn.

Regarding the November soybean/December corn price ratio, a figure over 2.40 has tended to boost soybean plantings at the expense of corn and vice-versa.

Along these lines, this chart shows the November soybean/December corn price ratio as of January 26 on the right-hand axis vs the percent acreage chance for both corn and soybeans from the prior's year's final acreage figures to the following planted area projections given in the end of March USDA Prospective Plantings report on the left-hand axis.

On Friday, the November 2024 soybean/December 2024 corn ratio closed at 2.49 and other than the 2.51 seen in 2014, the 2.62 in 2017, the 2.59 the following year and the 2.56 in 2021, this is the highest SX/CZ ratio as of January 26 since a 2.96 ratio was seen back in 1988.

Of note is the fact that those four years on average saw corn seedings fall 2.5% from the prior year's final acreage to the March planting intentions report while for soybeans the acreage planted rose by 4.3%.

Using the final 2023 planted area, figures of 94.6 million acres for corn and 83.6 million acres for soybeans would translate into a 2024 corn seeded area of 92.2 million acres and soybean plantings of 87.2 million acres.

This would be down 2.4 million acres for corn and up 3.6 million acres for soybeans which is within the range of estimates being tossed out ahead of the USDA's February 15-16 Ag Outlook Forum.

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