Fundamentally Speaking

Though the first week of May, precipitation through most of the key U.S. soybean and corn growing areas has been above average, keeping the seeding pace for each below the year ago levels.

For now, the pace of soybean seedings has been above average but this is not the case for corn.

This one of the reasons for the recent rally in each, though weakness in prices so far this week is tied to some ideas that a warm and dry 6-7 days in much of Midwest should allow for some good planting progress before wet conditions return on May 16.

This will be key if 2024 corn acreage is to rise significantly above the 90-million-acre estimate seen in the end of March planting intentions report.

Along these lines, this graphic shows the change in the November soybean/December corn ratio from April 1 to May 6 since 2005 on the righthand axis while on the lefthand axis is the change in U.S. corn and soybean planted area in 1000 acres from the March 31 Prospective Plantings to the June 30 Acreage Report.

The figures in the yellow rectangles are the SX/CZ ratios as of May 6. A look back at SX/CZ ratio action for this time period over the past 20 years shows that the largest ratio decline of -0.36 was three years ago resulting in corn area rising by 1.548 million acres, which was the largest increase between the 3/31 and 6/30 reports since 2009 but was eclipsed by the 2.10 mln acre gain in corn planted area last year.

This year the ratio increased slightly from April 1 to May 6 by 0.02 finishing at 2.50 which is well above the long considered break-even point of 2.35 and is the third highest since 2005 with corn trying to buy back some acreage from soybeans after this year's March intentions report showed corn area down 4.06 mln acres from the 2023 final figure while soybean seeded area was up 3.0 million.

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