Since the completion of the 2023 harvest season, there have been very few good opportunities to market corn and soybeans at favorable levels. This has resulted in a large amount of last year’s corn crop still in storage on farms across the Midwest.
This has left farmers with some very difficult grain marketing decisions for both the grain that is still in storage, as well as for the 2024 crop that will be planted in the next few weeks. The continued low corn and soybean prices resulted in greatly reduced profit levels for Midwest crop producers in 2023 and has lowered profitability prospects for 2024.
Nearby Chicago Board of Trade May corn futures closed at $4.28 per bushel following the release of the World Supply and Demand report on April 11, which was the lowest on the date of the April WASDE report since 2020. This was $2.23 per bushel lower than the nearby futures price of $6.51 per bushel following the April WASDE report in 2023, and compares to $7.84 per bushel in 2022 and $5.77 per bushel in 2021. Nearby CBOT May soybean futures closed at $11.59 per bushel following the release of the WASDE report on April 11, which was also at the lowest level since 2020. The 2024 Chicago Board of Trade soybean futures price compares to other recent April prices of $14.97 per bushel in 2023, $16.65 per bushel in 2022, and $14.03 per bushel in 2021.
From 2021 until early 2023, nearby futures prices on the Chicago Board of Trade for both corn and soybeans have been at the highest sustained levels since a similar period a decade earlier from 2011 to 2013. This allowed for some excellent profit margins for Midwest corn and soybean producers in 2021 and 2022, especially for farmers that had average or above average crop yields in those two years. The nearby Chicago Board of Trade corn futures price exceeded $5.00 per bushel from early 2021 until late June of 2023, and remained above $6.00 per bushel from early 2022 until late April of 2023. Prior to 2021, the nearby corn futures price had not been above $5.00 per bushel since late Summer of 2013. In fact, from 2015 through 2020, nearby corn futures were below $4.00 per bushel for a high percentage of the time.
The last extended period of higher levels of CBOT corn futures prices occurred from late 2010 through 2013. Nearby corn futures rose above $5.00 per bushel in September of 2010, exceeding $6.00 per bushel by early 2011, and going over $7.00 per bushel by June of 2011. Corn futures stayed strong in 2012, only briefly dipping below $6.00 per bushel, before reaching the all-time high of $8.38 per bushel during the intense U.S. drought conditions in August of 2012. Nearby corn futures stayed above $7.00 per bushel for the balance of 2012 and remained above $6.00 per bushel for most of the first half of 2013, before dropping significantly in the second half of 2013, ending the year near $4.25 per bushel, which is similar to current levels. By the summer of 2014, nearby corn futures had dropped to near $3.50 per bushel and only briefly topped $4.00 per bushel during the next several years.
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Similar to corn, the nearby CBOT soybean futures price exceeded $13.00 per bushel from early in 2021 until late in 2023, except for a few months in the fall of 2021 and a short period in the Fall of 2023. Nearby soybean futures prices exceeded $14.00 per bushel most of the time in 2022, trading above $16.00 per bushel for a few months in the spring and early summer that year. Prior to late 2020, the nearby soybean futures price had not exceeded $12.00 per bushel since late Summer of 2014.
During the last grain price “boom period” from 2011 through 2013, nearby soybean futures exceeded $13.00 per bushel for much of that period. During the drought year of 2012, nearby soybean futures traded above $16.00 per bushel in July and reached the all-time high soybean price of $17.68 per bushel in September that year. Nearby soybean futures prices remained near or above $13.00 per bushel for most of 2013 and the first half of 2014, before dropping to near $10.00 per bushel during the second half of 2014. Soybean futures traded near or below $9.00 per bushel during 2018 and 2019, due to the effects of the U.S. trade war with China.
The current downturn in the Chicago Board of Trade prices for both corn and soybeans has been driven by a combination of increasing U.S. and world grain stocks, fairly stable domestic and export demand for both commodities, and prospects for favorable U.S. corn and soybean production in 2024. Recent grain prices have also been affected by corn and soybean production estimates in South America, which can have a big impact on world grain supply and have a significant effect on U.S. grain export levels. There has also been some uncertainty in the grain markets in recent months due to the continuing Russian war in Ukraine and the growing tension in the Middle East.
The “basis” level for local corn and soybean cash price bids in some areas has remained at fairly tight levels in late 2023 and in early 2024. The “basis” is the difference between the local cash price being offered in a given month and the closest Chicago Baord of Trade futures price. Many processing plants and local elevators in the Corn Belt offered cash prices with a positive basis at certain times during 2022 and 2023. The current basis level for cash corn in southern Minnesota has been highly variable in recent weeks, with some ethanol plants and feed mills offering cash prices that are near or above the nearby Chicago Board of Trade futures price for a short time, while other locations have cash prices that are $.10 to $.30 per bushel below the nearby CBOT price. The soybean basis level in the region at soybean processing plants has been $.05 to $.15 per bushel below the Chicago nearby futures price, while basis levels at local grain elevators has generally been $.30-$.50 under Chicago futures prices.
The corn basis level for the fall of 2024 has widened out to approximately $.30 to $.50 per bushel under the Chicago Board of Trade December futures price at local ethanol plants and grain elevators in southern Minnesota. The soybean basis for the fall of 2023 has been near $.40 per bushel under at soybean processing plants and $.50 to $.75 per bushel below the November futures price at grain elevators. This is more typical of spring basis levels that existed prior to recent years for corn and soybeans. The basis levels at local grain elevators and processing plants are important to farm operators for determining pre-harvest grain market strategies in a given year.
Once farm operators reach planting season, they pay close attention to “new crop” December corn futures and cash prices for harvest season and beyond at local grain elevators and processing plants. December corn futures closed at $4.66 per bushel on April 11, which compares to $5.59 per bushel in mid-April a year ago, $7.35 per bushel in 2022, and $5.77 per bushel in 2021. Cash bids for fall delivery of the 2024 corn crop at local grain elevators and ethanol plants in southern Minnesota on April 11 ranged from $4.15 to $4.35 per bushel at many locations, compared to $5.00 to $5.30 per bushel a year ago. In 2023, new crop cash corn bids at most Upper Midwest locations dropped below $5.00 per bushel by early August and have not exceeded that level since then.
Prices for 2024 “new crop” Chicago Board of Trade November soybeans closed at $11.64 per bushel on April 11, which compares to $13.13 a year ago, just over $15.00 per bushel in mid-April of 2022 and $12.63 per bushel in 2021. Cash bids for 2024 “new crop” soybeans at grain elevators in southern Minnesota on April 11 ranged from $10.60 to $11.00 per bushel, with forward prices near $11.25 per bushel at soybean processing plants. These prices are about $1.50 per bushel lower than fall harvest soybean bids a year ago. New crop cash soybean bids were above $12.50 per bushel at local grain elevators for most of the last half of 2023 and were near $13.00 per bushel much of the time at soybean processing plants, before dropping to cash prices below $11.50 per bushel by early 2024.
Grain marketing decisions for the 2024 crop year will likely be very difficult for most producers, with current cash prices below breakeven levels. For many Midwest crop producers, the breakeven levels to cover direct and overhead expenses on cash rented land in 2024 will likely be near $5.00 per bushel for corn and over $11.00 per bushel for soybeans. In many years, the spring and early summer months offer some of the best opportunities to forward price “new crop” corn and soybeans. On the other hand, farmer operators do not want to miss the opportunity for a grain price “run-up” later this year, such as has occurred in some recent years when U.S. crop yields were lower than expected. If there is not a drought or other crop issues in the U.S. in 2024, corn and soybean prices are likely to follow a more typical seasonal price pattern as we progress toward harvest this year.
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Kent Thiesse is a Farm Management Analyst and writes the weekly "Focus on Ag" column. Contact him by phone at (507) 381-7960 or by email at kentthiesse@gmail.com.
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