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NAPERVILLE — The 2023 U.S. crop acreage conversation started many months ago, but Chicago futures prices during February will offer a solid piece of that puzzle, and corn may be making a better argument than soybeans right now.

New-crop CBOT corn and soybean futures are both starting February near the date’s highest-ever levels, theoretically beneficial for U.S. farmers as their 2023 insurance guarantees will be determined by this month’s average prices.

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But futures, especially soybeans, could soon slip well behind the year-ago pace due to the unusually strong rally last February tied to crop losses in South America and escalating tensions in Ukraine. This year, a record Brazilian soybean harvest will keep the pressure on.

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On Wednesday, December corn finished at $5.96-1/4 per bushel and November soybeans at $13.60-1/4, up 0.5% and down 1%, respectively, from their January averages. That compares with $5.78 and $13.82 on the same date last year.

There is not a solid seasonal tendency for new-crop prices during February, but last year’s gains were the month’s strongest in over a decade at 5% for corn and 9% for beans. The 2022 corn guarantee of $5.90 per bushel was the highest since 2011 and $14.33 on soybeans was an all-time high.

February 2021 gains were also multi-year highs at the time, but average February prices have usually fallen within 3% of the January ones in most recent years. The steepest losses by both percentage and absolute terms came in February 2009 as corn fell 32 cents (7%) and soybeans 91 cents (9%).

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SMALLER POOL?

In the last two years, stronger insurance guarantees had many market participants overestimating the total area U.S. farmers would plant, potentially by up to 10 million acres.

However, many analysts seem to have accepted that the U.S. acreage pool may be shrinking or at least staying the same rather than expanding back to last decade’s highs in response to price. Combined corn and soy acreage estimates are now closer to 178 million to 180 million rather than 183 million-plus two years ago, keeping primary crop acreage somewhat competitive.

But despite a tighter pool of acres and continued high prices, the phrase “acreage battle,” popular in the last two years, has been absent this year as rising production costs and market uncertainty has heightened caution among U.S. producers.

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Some U.S. farmers especially in rotational areas purchased 2023 seed last fall, and purely from a futures standpoint, corn looked a bit better then versus now. In mid-October, November 2023 soybeans averaged $13.53 per bushel versus December corn at $6.24, putting the bean-corn ratio at 2.17, a 10-year low for the date.

That ratio is now 2.28, a seven-year low for this week and equal to the 2016 levels. Values of 2.5 or greater distinctly favor soybeans, while those near or below 2.3 favor corn.

Fertilizer prices remain high but have eased since last fall, favorable for corn profitability prospects so long as corn prices do not significantly decline.

NORTH DAKOTA

Excessive spring rains caused record planting delays last year for North Dakota, where corn, soy, wheat and other crop acreage shifts more than in any other state. Insurance price for spring wheat is also set during February, and half of the U.S. spring wheat crop is planted in North Dakota.

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Some analysts thought last year’s planting delays would squeeze out wheat acres in North Dakota in favor of corn and soybeans, but the opposite happened. The state’s spring wheat plantings ended higher than original intentions while corn and soy acres ended lower.

That was motivated by the surge in new-crop Minneapolis wheat futures well above $13 per bushel during planting in May. Still, U.S. spring wheat acreage in 2022 was down from both intentions and the previous year.

Last year, new-crop spring wheat futures averaged $9.19 per bushel in February, the highest since $9.89 in 2011. September futures ended at $8.95 per bushel on Wednesday versus around $8.80 on the same date in 2022.

The North Dakota Crop Watch producer says that at current price levels, spring wheat is the least enticing profit-wise for 2023 due to high fertilizer costs. Corn and some specialty crops are the most attractive though soybeans may be money-losers. Karen Braun is a market analyst for Reuters. Views expressed above are her own.

(Writing by Karen Braun Editing by Matthew Lewis)