Corn versus Bean Acres

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   Corn versus Bean Acres

With the November bean option around $9.50 and December corn around $4, it's not clear if as many acres will switch from beans to corn for 2019.  Corn needs to buy 3 - 4 million acres from beans and that might not be as likely right now.  Are corn futures too low or are bean futures to high?  Basis levels throughout the U.S. indicate bean futures are probably too high and corn is "normal."   

 

It's important to understand the corn / bean price ratio (bean futures divided by corn futures) when it comes to planting acres.  If the ratio is above 2.45: 1, prices favor planting more beans.  If the ratio is below 2.35: 1, prices favor planting more corn.  With current prices ($9.52 Nov / $4.01 Dec) the ratio is 2.37: 1, so there is not an overly strong indicator to plant corn today.  But back on 11/1/18 when farmers were making seed and fertilizer purchases, the ratio was 2.26: 1; indicating farmers should consider strongly increasing corn acres.  While this can help with estimating, no one will know the actual planted acres for at least another couple of months.