Corn-Bean Ratio Still Higher Than 2008

Published on: 16:45PM Apr 19, 2013

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Corn and wheat closed higher while soybeans were lower, basically the opposite of yesterday’s market action.  December corn settled at $5.47 which is up 5 ¾ cents from yesterday.  November soybeans were 10 ½ cents lower at $12.13 and July wheat 7 ½ cents lower at $13.82 ½.

Weather is still playing a major role in price as many acres of corn are expected to switch to soybeans from delayed planting.  The corn to soybean ratio is down to 2.22, tying the low from late March just before the stocks report rocked the markets.

Corn-Bean Ratio for 2013Corn-Bean Ratio 2013

I have also included a chart of the new-crop corn-bean ratio for 2008 since this was the last year we had a true spring planting problem only that year it persisted all the way into late June.  Obviously we got below 2.0 for much of that spring and early summer as massive flooding prevailed across the Midwest.  To put that into perspective, that ratio would equal corn getting back above $6.06 ½ while November soybeans remained flat.  That price is a long way off from here but we have recommended purchasing some relatively inexpensive short-dated July corn calls to protect our hedges just in-case the planting problems persist far longer than what is forecasted.  I can also see the very plausible scenario where the ratio falls into line with 2008 but it’s because of a falling bean market, not from strong corn.  A lot of that may depend on old crop soybean tightness from export demand.  Either way it is still only April 19th, there is plenty of time for the weather to improve and for both markets to "unprice" this weather premium.  We recommend staying with the current EHedger sale levels.  For more details on our current hedging strategy, please sign up for our newsletter absolutely free using the link at the top.  Have a great weekend!

Corn-Bean Ratio for 2008Corn-Bean Ratio 2008


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