“The current thinking seems to be that acreage will be shifted from corn to soybeans as the current large corn harvest will result in a substantial buildup of inventories and low corn prices in relation to soybean prices,” Good says. “That is certainly the current situation for old-crop prices. The ratio of November 2013 soybean futures to December 2013 corn futures is near 2.9. However, planting decisions should be based on new-crop prices. The current ratio of November 2014 soybean futures to December 2014 corn futures is about 2.4. New-crop soybean prices are at a discount to old-crop prices while new-crop corn prices are at a premium to old-crop prices. The lower new-crop price ratio may reflect the expected acreage shift but in fact discourages such a shift.

“Many corn and soybean producers have already made acreage decisions for 2014, and more decisions will be finalized as the current harvest is completed,” Good says. “If acreage of corn remains relatively large in 2014, the combination of trend yields and a very mature market for U.S. corn would result in a further buildup of inventories next year. Under that scenario, prices would be lower next year, not higher as currently reflected in the market.”

Read more about 2014 crop acreage estimates from the University of Illinois.


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