USDA's March 2013 estimates of corn stocks were substantially higher than trade estimates (see here), initiating a substantial decline in both corn and soybean prices during the past week. In this article, the relative profit impacts for 2013 crops of these price changes are examined. During the first quarter of 2013, price changes have increased expected soybean returns relative to expected corn returns.

Corn and Soybean Price Changes

Central Illinois forward cash bids for 2013 harvest time were collected on Jan. 14, Feb. 28 and April 2 (see Table 1). Note that these are forward cash bids. Since the release of USDA reports on March 28, cash bids have declined more than harvest-time bids. For corn, cash prices fell roughly 90¢/bu. compared to roughly 40¢/bu. for harvest-time forward bids.

On Jan. 15, corn harvest-time bid was $5.60/bu. and soybeans were $12.50/bu., giving a soybean-to-corn price ratio of 2.23. On Feb. 28, corn forward bid was $5.30 and soybeans were $12.25, giving a soybean-to-corn price ratio of 2.31. Between Jan. 15 and Feb. 28, the soybean-to-corn price ratio increased from 2.23 to 2.31, indicating the price changes increased expected soybeans returns relative to expected corn returns.

 

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On April 2, corn forward bid was $5.10/bu. and soybeans bid was $12.20/bu., resulting in a soybean-to-corn price ratio of 2.39. The soybean-to-corn price ratio increased from 2.31 on Feb. 28 to 2.39 on April 2, again indicating that price changes increased relative expected soybean returns.