Fundamentally Speaking

Large Drop in Corn Prices Over Past 2 1/2 Years

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

As we noted in our final blog piece of 2024, corn, soybeans and its products and all three classes of wheat all ended the year lower for the second time in a row, the first time that has happened since the 2014 and 2015 calendar years.

The spot contract has corn down 2.8% vs the prior year's 30.6% tumble with the two-year decline down 32.5%, which is the largest drop since the combined 2014 and 2015 calendar years.

This of course has helped boost profitability in the various animal sectors given the decline in price of a major feed component in the feed rations.

To gain some perspective, this chart shows the monthly U.S. cash corn price as a percent of its respective rolling five-year averages.

We do the same for hog-corn, steer/heifer-corn, broiler-feed and milk-feed ratios.

Note that both the steer/heifer-corn and hog-corn ratio is the number of bushels of corn equal in value to 100 pounds of live weight.

The broiler-feed ratio is the pounds of broiler grower feed which is composed of 58% corn and 42% soybeans equal in value to 1 pound of broiler live weight while the milk-feed ratio is the pounds of a16% mixed dairy feed composed of 51% corn, 8% soybeans and 41% alfalfa equal in value to 1 pound of whole milk.

Hence all the ratios improve with rising hog, steer, broiler or milk prices and/or a fall in corn, soybean and alfalfa values and vice-versa.

We also show a table with the various correlation coefficients for the various meats and dairy product price feed-price ratios vs. the monthly corn price.

This graphic goes from January 2011 to November 2024 based on end of December USDA Agricultural Prices reports which calculate the various feed ratios.

Though corn prices have rallied since then, the U.S. November 2024 corn price then was $4.07 per bushel, which is still 21.1% below its rolling five-year average.

Back in August, the national corn price was $3.84 per bushel and at the lowest level since November 2020 and 25.5% below the five-year moving average, the lowest point using that metric since November 2017.

Corn prices have retreated significantly from their peak of $7.38 back in June of 2022 and this along with lower protein meal and forage values have really enhanced feed margins.

Aided by continued record fed cattle prices and the second highest milk values ever last year, both the steer-feed and milk-feed rations as the best levels in close to ten years with broiler and hog margins also benefiting from the substantial retreat in the value of a key feed component.

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