It is all about the denominator

Thursday’s USDA grain report further solidified what has been developing all year – we have a big crop coming at us. This is not new information, it is simply confirmation that we are closing in on yield numbers that we have never seen before on both corn and soybeans – corn at a solid 6 bushel advantage over the previous record of last year, soybeans at a more modest 1 bushel record.   Prices of both corn and soy are in the realm of sane as depicted by the charts below that show us at/near the price relationship that correlates to a corresponding carryout to use ratio. If you were going to argue that something is askew, you could contend that beans are priced too high and I would nod my head in agreement. The world is currently awash in soybeans and the expanded acreage anticipated from Brazil should add to the burdensome stocks. I suspect we will migrate toward $9/bushel cash beans rather than the current values that are closer to $10. (October bids for beans delivered to Cedar Rapi