Fundamentally Speaking

Both corn and soybean futures have receded this past year but the declines in soybeans are much greater than those for corn as fundamentals on both a domestic and international basis are far more compelling for corn as opposed to the soybean market.

Here in mid-December, the current spot price of corn is $4.45 and that for soybeans is $9.82.

This results in a spot soybean-corn price ratio of 2.21 as corn is down 7.1% from its year-ago mid-December value of $4.79 while soybeans are down 25.4% from the year-go figure of $13.17.

This is the largest year one-year decline in soybean values basis mid-December since December 2008 when they were down 26.9% from their mid-December 2007 price.

This chart shows the soybean/corn futures price ratio on a per pound basis with the 25, 50 and 75% bands on the left-hand axis.

Reported on the right-hand axis is the soybean/corn futures price ratio and the ratio of the monthly average farm price received per bushel price.

The current spot ratio of 2.21 is just above the low of 2.18 seen at the end of May 2023 and prior to that the lowest since November 2022.

With soybeans at 60 pounds per bushel and corn at 56 pounds, on a per pound basis the soybean/corn ratio is 2.06, also the lowest value seen since the end of May 2023 and prior to that the lowest since November 2022.

It is also below the 25% band of 2.11 so the current ratio is in the lowest quartile of values that have traded on a monthly basis since January 1985.

The last USDA Ag Prices report showed the October 2024 average farm price received for corn on a national basis at $3.99 for corn and $9.91 for soybeans for a ratio of 2.48 which is the lowest since August 2023 as that soybean value the lowest since October 2020.

There is a lot of uncertainty heading into next year given the new economic, trade and foreign policies of the incoming Trump administration and questions as to how the South American row crops will finish.

Nonetheless the current new crop soybean-corn ratio is now trading at 2.27 which is the lowest point for that contract since September 2022 and feeds into the narrative that corn will gain at least 2-3 million acres from soybeans this upcoming growing season.

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