The 2023 calendar year wasn’t exactly kind to the corn and bean markets. As we take a look at just how much our markets have fallen, we must keep things in perspective. As commodity markets weaken, we typically see costs of production ease as well. How will this impact the farm’s bottom line as we continue to see commodity and input prices adjust? Let’s look at four areas to consider for managing risk.

1. First, let’s take a look at how commodity prices performed in 2023. For corn, we saw front-month March futures close at $6.78½ on Dec. 30, 2022. This compares with $4.71¼ CH24 where we closed out 2023. While the $2 loss basis-the-board stings, cash prices relative to futures were stronger as well.

In Decatur, IL, we saw basis at 25 over, giving the producer $7-plus corn as we closed 2022, while basis in Decatur was just two pennies over as we closed 2023. With cash corn worth $2.25-plus less than a year ago, it’s been quite the haircut.

2. Let’s look at fall corn prices as well, as we look at what these fluctuations might mean moving forward. Dec24 corn also dropped, but not as significantly. Dec24 settled the ‘22 year at $5.62, whereas the settlement price to close ’23 was $5.03½. Essentially a 60-cent drop leads many to believe corn acres will dip – but more on that later.

3. Cash bean prices also took a hit but nothing like corn, relatively speaking. March ‘23 bean futures closed 2022 at $15.24, while March ’24 beans closed 2023 at $12.98. Bean basis to close ’22 was a dime over in Decatur, while option price to close ’23. While basis for beans hasn’t been near the factor for corn, cash prices for beans were certainly more attractive a year ago than what we see to start 2024.

Nov24 beans settled the ’22 year at $13.25, while settling at $12.45¾ for the ’23 calendar year. While the 80-cent move lower seems rough, I’d like to point out we traded up to $13.17 as recently as November 21.

4. Fertilizer prices have shown downward moves there as well. My price levels are based on what my customers and I have experienced. With regard to dry fertilizer, phosphates bought in fall of ’23 were on average 15-25% cheaper than prices paid in fall of ’22.

Potash was a bigger drop with an average producer paying 35-40% less than paid a year ago.

Nitrogen was likely the biggest drop with some anhydrous prices in the fall of ’22 approaching $1,500 per ton, while many producers paid about $600 per ton this past fall.

Look to defend profit margins

Given the USDA’s currently calling the ’23 corn crop at 15.2 billion bushels (the biggest ever), I struggle to see any big rally effort for cash corn. With regard to cash beans, if weather in South America continues to improve, I have a tough time getting bullish cash beans as well.

Therefore, let’s focus the remainder of this discussion on the coming crop. Given the big drop in Dec 24 corn and an 11.3-million-acre gap from corn to beans in ’23, I predict corn acres to drop significantly while bean acres grow. While I don’t think we’ll see parity with regard to acres, I’d expect the gap to narrow big-time.

What likely saves some corn acres is fertilizer prices cheapening, so my best guess today would be 91 or so for corn acres, while total corn/bean acreage in my opinion is unlikely to exceed ’23 acres as profit margins continue to wilt. If we use 178 million-acres, this leaves us with 87 million bean acres for ’23.  

Lastly, how do we think this impacts prices? My gut tells me with normal weather in ’24, it will be tough to see CZ24 or SX24 higher than today’s prices at the end of the year. Given big carry-in for corn and a big acreage bump for beans, normal weather likely gives us larger corn and bean stocks at the end of this marketing year. Therefore, looking to sell rallies and defend profit margins as we go through ’24 would be more of my focus than remaining in the ‘hope’ camp.

Based on the calculations we do for the growers we work with, my targets for additional sales or to get started are CZ24 at $5.25 and SX24 at $12.75.

Feel free to reach out to me or anyone on the AgMarket team. We’d love to hear from you. Also, check out our winter conference that will be held February 4-5.

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