Fundamentally Speaking

There were a number of reasons why U.S. farmers planned to increase their corn seedings at the expense of soybeans this year, including better prospective per-acre returns for corn as opposed to soybeans. Also, corn yields have held up better than soybeans in recent seasons, with back-to-back years of record-high corn yields and no soybean record yield seen since 2016.

Add to those, ideas that corn values will fare better in the current trade war environment as a far smaller percentage of U.S. production is exported as opposed to soybeans.

As a result, 2025 corn plantings in the end of March intentions report are 4.732 million acres higher than the prior year's final acreage -- the largest such increase since 2020. Prospective soybean acres are down 3.29 million versus last year's final figure -- the largest decrease since 2019.

Along these lines, the accompanying chart 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 the largest ratio decline of -0.36 was four years ago, resulting in corn area rising by 1.548 million acres, which was the largest increase between the March 31 and June 30 reports since 2009, but was eclipsed by the 2.10 million acre gain in corn planted area two years ago.

This year the ratio was unchanged from April 1 to May 6 by 0.02, finishing at 2.31, which is below the 20-year average of 2.37, suggesting more corn acreage. That, however, does not tell the full story for over the past week it appears the trade is thinking a relatively fast corn seeding pace so far this spring and a favorable weather forecast going forward could result in an even higher figure in June than the 95.326 million stated in the March intentions report.

A closer look at the SX/CZ price ratio action shows from April 1 to April 7 the ratio went from 2.31 down to 2.20. Since then, however, it has spiked to 2.34 through Friday's action, seemingly in reaction to ideas that the June acreage report -- based on weather, the ongoing trade war and the final results on the South American harvest -- will increase 2025 corn acres further and soybean planted area will, perhaps, decline even more from the year-ago level.

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