Unprecedented Shift: Surprising Dynamics Show Corn and Soybean Supplies in the 2023–24 Season
In the uncommon interplay between U.S. soybean and corn supplies for the 2023–24 period, an unusual narrative unfolds as corn stockpiles increase while soybean reserves decrease, keeping soybean prices relatively buoyant compared to corn.
Typically experiencing similar weather conditions during the summer, both crops tend to move in tandem. However, this year’s imperfect conditions led to lower-than-expected yields, despite the record corn crop achieved through a decade-high corn acreage.
The U.S. Department of Agriculture (USDA) foresees a contrasting trend for the 2023–24 season, with corn supplies anticipated to surge by 10% while soybean inventory is expected to contract by 3%.
This divergence echoes a similar scenario witnessed in 2007–08, when farmers were encouraged to allocate more land to corn due to renewable fuel mandates linked to corn-based ethanol.
Another comparable instance was in 2003–04, where soybean crops were marred by widespread pest issues and dry weather, resulting in a decline in supplies.
However, the anomaly in the 2023–24 crop year lacked such distinctive circumstances, hinting that the market signals from the previous year may have disproportionately favoured corn over soybeans.
Corn plantings in 2023 exceeded 95 million acres, about 5% higher than the recent average, indicating a potential shift in 2024.
Historically, notable changes in U.S. acreage, particularly a decrease in corn and an increase in soybeans, occurred following years with substantial leaps in corn stocks, such as 2008, 2014, and 2017.
USDA’s longer-term projections hint at a forthcoming adjustment in 2024, estimating corn acres at 91 million and soybeans at 87 million, compared to 83.6 million in 2023. Nevertheless, these figures closely resemble early acreage estimations from the past couple of years, raising doubts about their accuracy.
Although high crop yields bolster stockpiles, recent years have seen acreage disparities significantly influence actual supply dynamics. This trend has tightened the soybean situation as market optimism regarding the oilseed has surpassed that of U.S. farmers.
Over the last six years, pre-planting March trade estimates for U.S. soybeans have consistently exceeded actuals, by a cumulative 22.2 million acres, equivalent to roughly 1.1 billion bushels of production.
In contrast, corn has seen a net reduction of 5.2 million acres compared to initial market projections, translating to about 840 million bushels with conservative yield estimates.
Despite these shifts, U.S. corn ending stocks for 2023–24 are anticipated at 2.16 billion bushels, contrasting with the projected 245 million bushels for soybeans.
An interesting scenario emerges as Chicago soy futures trade at their highest levels relative to corn in several years. This trend, along with cost considerations, could favour soybeans over corn in the upcoming planting season.
Although the current year reflects a skewed balance between high corn prices and low bean supplies, adjustments may occur as the marketing year approaches its end in August.
However, substantial changes are unlikely until early next year, as the USDA typically refrains from making significant U.S. revisions in its December report.
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