The final numbers for the U.S. government crop insurance spring pricing are in, with December corn averaging $3.88 and November soybeans $9.17. These prices are dramatically lower than last year with corn down 12 cents, or 3%, while soybeans came in 37 cents (4%) less.
Let’s take a look at some of what these numbers may be telling us. First, the final soy/corn price ratio for crop insurance was 2.36, down from the previous year’s 2.39 and the two year’s before that 2.57. This would imply futures were trying to buy corn acres over the course of the month. But why?
Let’s think about what we know for certain about the 2020-2021 Supply and Demand table. That’s right, nothing. But as we will talk about over the course of the weekend, 2019-2020 cash markets are indicating corn’s ending stocks-to-use is tightening while soybeans’ ending stocks-to-use is larger than what USDA’s numbers show at this time. This being the case, it would imply beginning stocks of corn are likely smaller that what’s being talked about and more cumbersome in soybeans. What are the old-crop ending stocks/new-crop beginning stocks? Nobody knows, and I mean nobody, including USDA. But, again, we can get an overall supply and demand picture by studying what the cash markets and these new crop futures average closes are telling us.