The historical highs in Chicago soybean prices relative to corn ahead of the 2024 season are a reflection of evolving market dynamics, including strong global demand for soybeans and changing trade relationships. This shift suggests that concerns about soybean supply are currently outweighing those related to corn production, with potential implications for the 2024 season. Stakeholders in the agricultural sector should closely monitor market conditions and be prepared to adapt to shifting trends in crop prices and planting choices.
A similar price difference in 2016 between soybeans and corn led to the overproduction of soybeans in the following two years. This overproduction eventually moderated soybean futures prices. Lighter-than-expected U.S. soybean plantings, exceptionally dry June weather, and yield-limiting dry conditions late in the growing season are some of the major factors influencing the price shift.
In the last three weeks, Chicago Board of Trade (CBOT) November soybean futures rose by 6.6%, while December corn futures lost 2.4%. This pushed the soybean-corn ratio to a seven-year high of 2.86. While the soybean-corn ratio typically averages around 2.47 during August. In contrast, the ratio was only 2.1 a year ago, favoring corn. In 2016, the ratio reached around 3.0, leading to significant soybean production.
The current ratio’s movement closely resembles that of 2013. In that year, the ratio reached 3.0, and soybean prices remained strong while corn prices declined due to differences in supply dynamics.