Latest / AG Bull / AEI.Ag | Corn Or Soybeans? The 2026 Acreage Battle

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AEI.Ag | Corn Or Soybeans? The 2026 Acreage Battle · AG Bull

• 0:22
  SPEAKER_01: What a week, what a week.
• 0:23
  SPEAKER_01: Tommy Grassofi, AgBow Media, the AgBo podcast.
• 0:26
  SPEAKER_01: We're talking about economics.
• 0:28
  SPEAKER_01: I got the one and only Mr.
• 0:31
  SPEAKER_01: David Whitmer.
• 0:32
  SPEAKER_01: They say he's putting on hair and makeup, getting all pretty.
• 0:35
  SPEAKER_01: He's with A E I dot ag.
• 0:39
  SPEAKER_01: For those of you slow learners in the back, we got it up here.
• 0:42
  SPEAKER_01: You gotta check out the website.
• 0:44
  SPEAKER_01: It's a good one right there.
• 0:46
  SPEAKER_01: Let's bring him in the show.
• 0:47
  SPEAKER_01: He is the star of the show, and maybe even his slides are the star of the show.
• 0:51
  SPEAKER_01: How are you doing, my friend?
• 0:52
  SPEAKER_00: I'm doing well, Tommy.
• 0:53
  SPEAKER_00: They did all the makeup and the uh all hair they could work with, and not much improvement.
• 0:57
  SPEAKER_01: I can't work with these people.
• 0:59
  SPEAKER_01: They can work with me.
• 1:01
  SPEAKER_01: Well, good, good.
• 1:02
  SPEAKER_01: You're an easy guy to get a hold of.
• 1:03
  SPEAKER_01: Your website looks incredible, and you guys work hard at it.
• 1:06
  SPEAKER_01: All right.
• 1:08
  SPEAKER_01: Markets are busy.
• 1:10
  SPEAKER_01: Let's get right in the show.
• 1:11
  SPEAKER_01: You brought some really great slides.
• 1:13
  SPEAKER_01: I'm gonna let you talk.
• 1:14
  SPEAKER_01: I'll add a little color in the background.
• 1:16
  SPEAKER_01: Don't get scared.
• 1:17
  SPEAKER_01: I'm still here.
• 1:18
  SPEAKER_01: The stage is yours, my friend.
• 1:20
  SPEAKER_00: Well, thank you, Tommy.
• 1:21
  SPEAKER_00: One of the things we've been hearing from a lot from producers is what rental agreement?
• 1:26
  SPEAKER_00: What should I be doing with cash rents?
• 1:28
  SPEAKER_00: I think it's been a bit of a surprise here that cash rents have been a bit stubborn in the face of these tight margins.
• 1:34
  SPEAKER_00: I think government payments help supporting this.
• 1:35
  SPEAKER_00: But one thing that we did is we stepped back and said, which rental agreement is best?
• 1:40
  SPEAKER_00: And the answer is it depends.
• 1:42
  SPEAKER_00: This chart simply looks at Indiana returns.
• 1:45
  SPEAKER_00: It's going to be the same story for across the corn belt and much of the plains.
• 1:49
  SPEAKER_00: Cash rent, and what we're specifically measuring is returns to overhead.
• 1:53
  SPEAKER_00: So this is what the farm operator, the person playing the corn seed and the soybean seed, this is what they can expect to get after they've paid their seed, their fertilizer, and their rent.
• 2:02
  SPEAKER_00: So they're rent's already taken out of this.
• 2:04
  SPEAKER_00: So if they get cash rent agreement, you can see that's in blue.
• 2:08
  SPEAKER_00: In 2010-11, they are getting about 300 bucks an acre as a return to overhead that jumped in 2021 to more than 400.
• 2:15
  SPEAKER_00: But take a look in the lean years.
• 2:17
  SPEAKER_00: That cash rent in blue is often behind flex and share crop arrangement arrangements.
• 2:23
  SPEAKER_00: That's because it's pretty lean in those years.
• 2:25
  SPEAKER_00: And so there isn't that risk management feature.
• 2:27
  SPEAKER_00: I think cash rents and sharecrop and flex crop provides a little bit more of a risk management tool than we initially think about.
• 2:34
  SPEAKER_00: On the next slide, we tried to summarize all those years of dots.
• 2:37
  SPEAKER_00: And you can see on average, the cash rent gets you$142 an acre.
• 2:43
  SPEAKER_00: That's the highest for that 2010 to 2024 period.
• 2:46
  SPEAKER_00: A flex bonus agreement, that producer, the farmer's only gonna get 135 on average, crop share gets even lower.
• 2:52
  SPEAKER_00: But take a look over to the right.
• 2:54
  SPEAKER_00: You know, there's that quote that Mark Twain probably said about lies, damned lies, and statistics.
• 2:59
  SPEAKER_00: Well, I think it should be lies, damned lies, and averages because the averages can be deceiving.
• 3:04
  SPEAKER_00: Look at the lean years.
• 3:05
  SPEAKER_00: During those lean years, cash rent only gave back$38 of return to producers, but look at crop share 72.
• 3:13
  SPEAKER_00: During the boom years, that's whenever those cash rents do really well.
• 3:16
  SPEAKER_00: Interesting.
• 3:16
  SPEAKER_00: 262 compared to 181.
• 3:18
  SPEAKER_00: Again, this is just a risk management tool that I think it's overlooked.
• 3:21
  SPEAKER_00: And you really have to look at this over decades.
• 3:24
  SPEAKER_00: You can't just look at two or three years of observations.
• 3:27
  SPEAKER_00: You gotta really stretch it out and catch those cycles.
• 3:30
  SPEAKER_01: Absolutely.
• 3:31
  SPEAKER_01: All right, this one I found really interesting, and it's pretty too.
• 3:35
  SPEAKER_01: Do tell.
• 3:36
  SPEAKER_00: Well, we talked earlier and we've been doing a lot of work talking about the corn versus soybean shift.
• 3:41
  SPEAKER_00: We talked about how corn acreage has been moving west.
• 3:44
  SPEAKER_00: Not a lot of change in the eastern corn belt on corn acres over the last few years.
• 3:49
  SPEAKER_00: And what's happening here is economics.
• 3:51
  SPEAKER_00: And what do I mean by that is the chart on the left looks at relative yields.
• 3:56
  SPEAKER_00: And so we took corn yields divided by soybean yields.
• 3:59
  SPEAKER_00: And as you look around the country, North Dakota, South Dakota, Western Minnesota, that is the part of the country that has some of the strongest relative corn yields.
• 4:07
  SPEAKER_00: We also see in central Kansas and parts of Oklahoma and Texas, probably irrigation in some of those regions, but also in parts of the south, corn yields beat soybeans.
• 4:16
  SPEAKER_00: Look in the eastern corn belt.
• 4:17
  SPEAKER_00: You can draw a box there from Missouri into Illinois, into Indiana, Ohio, and you can see that light shading there.
• 4:25
  SPEAKER_00: That's where soybean yields are relatively the best.
• 4:28
  SPEAKER_00: Now let's sort of jump to the other side of the chart here, and we're looking at relative farm prices.
• 4:33
  SPEAKER_00: This is USDA release data.
• 4:36
  SPEAKER_00: So if you see a light shading, this means that the corn soybean ratio is low.
• 4:40
  SPEAKER_00: That means it's relatively higher corn prices.
• 4:43
  SPEAKER_00: When I draw that box, that blue box in those same regions of Illinois, Indiana, Ohio, it's the darkest shading.
• 4:50
  SPEAKER_00: So that's where soybean prices have led over the last five years.
• 4:54
  SPEAKER_00: So you combine these two situations.
• 4:56
  SPEAKER_00: If you draw, if you look up and down the plains, you're going to have higher relative corn yields, better corn favoring prices, that lower price ratio.
• 5:04
  SPEAKER_00: If you move to the Eastern Corn belt, this pendulum swings and it favors soybeans because of that price ratio and because of those yields.
• 5:14
  SPEAKER_00: I like it.
• 5:15
  SPEAKER_00: One of the things that we next did is I was kind of skeptical about this.
• 5:19
  SPEAKER_00: How much of an impact does this have on the budget?
• 5:21
  SPEAKER_00: So I made a base scenario of corn versus soybeans, you know, which one is going to be better for producers.
• 5:26
  SPEAKER_00: And what I did is I said, let's just tweak the soybean assumptions.
• 5:30
  SPEAKER_00: Let's tweak the soybean to say we're in a corn favoring scenario.
• 5:33
  SPEAKER_00: So I made the price ratio, I dropped it, I jumped up the yield ratio, and that took$60 an acre out of soybeans.
• 5:41
  SPEAKER_00: I went back to the base and I said, let's make it a soybean favoring scenario.
• 5:45
  SPEAKER_00: And I made it a higher price ratio.
• 5:47
  SPEAKER_00: I made it a lower yield ratio.
• 5:49
  SPEAKER_00: So it's really favoring soybeans like we see in the eastern corn belt.
• 5:52
  SPEAKER_00: That added$94 an acre to the crop budget.
• 5:55
  SPEAKER_00: So if you think about an average corn budget across the country, and then you start dialing that in for what you might be seeing in the northern Great Plains or in the Eastern Corn Belt, you could really see$150 an acre swing in that soybean revenue alone just by dialing that in.
• 6:10
  SPEAKER_00: I think this is one of the big challenges that producers are going to be thinking through.
• 6:15
  SPEAKER_00: One, how do I take national or even state level summaries of what's going on in the farm economy and make it applicable to my operation?
• 6:22
  SPEAKER_00: And next question is how do I find out what's the right price and yield ratio that I should be putting in my crop budgets?
• 6:30
  SPEAKER_01: How about these guys here?
• 6:31
  SPEAKER_01: China, a lot of uh lot of taco China this week.
• 6:34
  SPEAKER_00: A lot of talk of China, and a lot of focus on the rare earth metals.
• 6:40
  SPEAKER_00: And if you're like me, you had to go to Wikipedia and figure out what rare earth metals were.
• 6:43
  SPEAKER_00: Were there 13 very important elements on the periodic table?
• 6:47
  SPEAKER_00: I did not know that.
• 6:49
  SPEAKER_00: I do now, though.
• 6:50
  SPEAKER_00: So they're really important for electronics, lasers, even some glass.
• 6:55
  SPEAKER_00: And so when we think about how we're moving the economy forward, magnets is really the big one.
• 7:00
  SPEAKER_00: Lots of articles about how we're sourcing magnets and how that's really important.
• 7:04
  SPEAKER_00: So China has something like 70% of the mining and 90% of the production.
• 7:08
  SPEAKER_00: Well, let's take this closer to the farm.
• 7:11
  SPEAKER_00: We've been watching this for several years and we're measuring China's hoard of crop stocks.
• 7:16
  SPEAKER_00: And so we took soybeans and corn and cotton, we converted them to acres and said, how many global, how many, how much of the global stocks of corn, soybeans, wheat, all the 13 principal crops, how many of them are in China alone?
• 7:30
  SPEAKER_00: And it's around 50%.
• 7:32
  SPEAKER_00: That's sort of the rule of thumb.
• 7:33
  SPEAKER_00: Now, if we'd rolled the clock back to the mid-2000s, they would have been holding around 25%.
• 7:38
  SPEAKER_00: So one of the things that we've seen over the last couple decades is China's been building their grain stocks.
• 7:43
  SPEAKER_00: I think the other piece here to keep in mind is it's pretty volatile.
• 7:46
  SPEAKER_00: They're never at normal or average, they're always moving this number around.
• 7:50
  SPEAKER_00: But really take a look at what's happening during this trade war, is they're starting to dip into that.
• 7:54
  SPEAKER_00: So they're gonna see their stocks pull back a little bit during this trade war.
• 7:58
  SPEAKER_00: And again, the idea here is they hold about half of all the available grain or crops inventories, but they're not really exporting these.
• 8:07
  SPEAKER_00: And so these aren't available for global trade.
• 8:10
  SPEAKER_00: And I think it's just one of those interesting market dynamics that we got to keep in the back of our mind.
• 8:14
  SPEAKER_00: Now, what's different from these rare earth metals from crops is China needs to buy these global crops.
• 8:22
  SPEAKER_00: So they're actually out there buying these goods and commodities to meet up with their local and domestic usage for these crops.
• 8:30
  SPEAKER_00: So they're not really in the supply seat on the crops, they're in the buyer seat for here.
• 8:35
  SPEAKER_00: So I also dug into these specific crops.
• 8:37
  SPEAKER_00: I took that chart from earlier, said what are the top five crops?
• 8:40
  SPEAKER_00: And we took a look at this.
• 8:41
  SPEAKER_00: If you look from 2010 to 2018, they added a lot of corn and wheat stocks.
• 8:47
  SPEAKER_00: They have about 160 million, so more than half of all their stocks are in corn and wheat alone.
• 8:53
  SPEAKER_00: That's been tapering down over the last few years.
• 8:55
  SPEAKER_00: The other crop to keep an eye on there is in that red.
• 8:58
  SPEAKER_00: It's soybeans.
• 8:59
  SPEAKER_00: They had about 20 million acres worth of ending stocks during the last trade war.
• 9:03
  SPEAKER_00: They're up to 40 today, and so they definitely uh added some buffer into their trade war plans as they were over the last few years.
• 9:12
  SPEAKER_00: One thing I want to point out here is the early estimates, preliminary, you know, this is an ongoing situation, so it could update quite a bit in the next few months, especially as the USDA comes back online.
• 9:24
  SPEAKER_00: Is where are China pulling those stocks out of?
• 9:28
  SPEAKER_00: They're pulling them out of corn.
• 9:29
  SPEAKER_00: You can see corn dip down a lot, a little bit out of wheat, not much change on the soybeans, the rice, or the cotton.
• 9:37
  SPEAKER_01: Excellent.
• 9:38
  SPEAKER_01: And for the folks listening on Spotify, Apple or anywhere you enjoy listening to the podcast, if you would like a copy of these six beautiful charts, email me tg at agbull.com or get a hold of Mr.
• 9:53
  SPEAKER_01: David Whitmer himself.
• 9:55
  SPEAKER_01: He's easy guy to get a hold of.
• 9:57
  SPEAKER_01: Ae I dot ag.
• 9:59
  SPEAKER_01: We're gonna chat a little bit about this week's markets.
• 10:02
  SPEAKER_01: He brought some beautiful slides there.
• 10:05
  SPEAKER_01: Did you notice uh corn?
• 10:07
  SPEAKER_01: And as I look, I'm looking over my camera, beans are on the high, and I think they're up seven or eight, my friend.
• 10:12
  SPEAKER_01: What do you think of this price section?
• 10:14
  SPEAKER_01: This was filmed on 10, 17, 2025.
• 10:17
  SPEAKER_01: It's gonna be released on Sunday morning.
• 10:20
  SPEAKER_01: But we have been trending up this week in grains.
• 10:23
  SPEAKER_01: The stage is yours.
• 10:25
  SPEAKER_00: I think it's maybe an opportunity for some producers to price some crops that they needed to get priced.
• 10:30
  SPEAKER_00: I think we're fumbling through this.
• 10:32
  SPEAKER_00: We don't have a lot of export, we don't have any export data, but what's been out there being purchased, we don't have the Wazi report.
• 10:37
  SPEAKER_00: So we're moving through here.
• 10:39
  SPEAKER_00: I think that what I'm looking at, of course, is 2026.
• 10:43
  SPEAKER_00: I'm thinking about the acreage allocation for those 2026 crops, and so we'll see how that price ratio continues to move for the November 26th soybeans and the December 26th corn crop.
• 10:53
  SPEAKER_00: We'll see how that plays out.
• 10:55
  SPEAKER_00: Corn still has a budget advantage, but it's not as strong as it was a year ago.
• 11:00
  SPEAKER_00: And so soybeans are probably going to pick up a few acres, and we'll see how that plays out.
• 11:04
  SPEAKER_01: It's gonna be interesting.
• 11:05
  SPEAKER_01: We know shortage of volatility talking about gold, silver, crude oil.
• 11:09
  SPEAKER_01: Crude oil is actually trendy down.
• 11:11
  SPEAKER_01: Couple things on the just economic, some things I know about.
• 11:14
  SPEAKER_01: The two-year yield hit three-year lows overnight.
• 11:19
  SPEAKER_01: Gold and silver hit record, record, double, triple record highs this week, and then sold off late in the week.
• 11:26
  SPEAKER_01: We're seeing extreme volatility.
• 11:28
  SPEAKER_01: China, let me repeat, China has bought zero, zero soybeans from us, and soybeans are rallying.
• 11:35
  SPEAKER_01: They rallied the last few days, and they're looking pretty good.
• 11:37
  SPEAKER_01: Now, maybe we're losing some of that in the cash market, but my folks up in North Dakota, their cash market went from$1.75 under to a dollar 25 under.
• 11:46
  SPEAKER_01: Quick 50 cent pop.
• 11:48
  SPEAKER_01: United States government's gone.
• 11:50
  SPEAKER_01: I'll ask you a question before we get out of here.
• 11:52
  SPEAKER_01: Is there any chance people have been buying and it's not being reported?
• 11:55
  SPEAKER_01: Stage is yours.
• 11:57
  SPEAKER_00: I think it's definitely a likelihood that somebody's been out there buying over the last couple of weeks.
• 12:01
  SPEAKER_00: I think it's a question of who, and maybe I don't know if the question everyone asking is China out buying soybeans over the last couple of weeks.
• 12:07
  SPEAKER_00: I think it's what's Tommy, you mentioned uncertainty.
• 12:10
  SPEAKER_00: I think that's a really key term here.
• 12:12
  SPEAKER_00: Is usually when we get to the October Wadsee report, we narrow that yield in.
• 12:16
  SPEAKER_00: So we have a little bit better expectation about what these crops are going to be.
• 12:20
  SPEAKER_00: But now we're flying blind and we didn't get that uncertainty reduction about the size of the crop.
• 12:26
  SPEAKER_00: I don't think it's been a secret that the drought moderate map has been continuing to darken over the fall.
• 12:31
  SPEAKER_00: So there's some questions about the size of the of the yield.
• 12:33
  SPEAKER_00: I think we also have a huge question mark about soybean exports.
• 12:37
  SPEAKER_00: Usually, when we get to this time of the year, we have a pretty good idea what China is going to buy.
• 12:41
  SPEAKER_00: China's soybean purchases are highly seasonal and a huge question mark out there.
• 12:47
  SPEAKER_00: And so all this uncertainty just creates a whole lot of headache for producers and market observers for the next several weeks and months ahead.
• 12:54
  SPEAKER_00: Excellent.
• 12:55
  SPEAKER_01: Let's take a break here and uh get a little uh advertising in for you and me.
• 12:59
  SPEAKER_01: For me first, if you enjoy this video, pretty soon in the next few months.
• 13:02
  SPEAKER_01: This video is going to be just for AEI.ag clients and agbo premium clients, but we'll give it to you free here, probably till the end of the year, so you can get to know both of us.
• 13:12
  SPEAKER_01: But for$25 a month,$250 a year, of course, don't worry if you like buying stuff.
• 13:16
  SPEAKER_01: This young man's got something to sell you too.
• 13:19
  SPEAKER_01: Help what you do and how you add value and how they can get a hold of you.
• 13:23
  SPEAKER_00: Well, thanks, Tommy.
• 13:24
  SPEAKER_00: AEI helps agribusinesses and producers navigate all the uncertainty around the farm economy.
• 13:29
  SPEAKER_00: So we take a look at what's happening with acreage trends.
• 13:32
  SPEAKER_00: We take a look at what's happening with farm level budgets, what's happening with net farm income and farm loan delinquencies.
• 13:38
  SPEAKER_00: And so we pull that together and we also talk about strategies.
• 13:42
  SPEAKER_00: So strategies for producers to navigate the uncertainty they have here in 2025, heading into 2026.
• 13:48
  SPEAKER_00: It's all about good decisions and good data to help navigate that.
• 13:52
  SPEAKER_00: And that's what we do at AEI.
• 13:54
  SPEAKER_01: I like it.
• 13:55
  SPEAKER_01: All right.
• 13:55
  SPEAKER_01: This week I've been asking people I've had on the show to leave us with something positive about agriculture, and then I will hit the closing bell.
• 14:04
  SPEAKER_01: Go ahead, my friend.
• 14:05
  SPEAKER_00: Well, I think one of the key things that uh is positive about agriculture is there's a lot of folks talking about this peak population story.
• 14:13
  SPEAKER_00: And I think that we're ignoring a whole two other sources of demand growth in global and US agriculture.
• 14:21
  SPEAKER_00: It's income.
• 14:22
  SPEAKER_00: And the income story generally means we see more purchases happening for higher cost goods like proteins and all and all animal proteins and higher protein field crops.
• 14:33
  SPEAKER_00: So I still think we're gonna see growth there.
• 14:35
  SPEAKER_00: I also think we're gonna see growth from environmental services or government programs.
• 14:39
  SPEAKER_00: I don't, you can lump a lot of things into that.
• 14:41
  SPEAKER_00: But if you think about where we've seen a lot of excitement and growth in agriculture in the US over the last few decades, it's ethanol, it's soybean crushing and creating renewable diesel.
• 14:50
  SPEAKER_00: I think those are still going to be sources that stick around for quite a while.
• 14:54
  SPEAKER_00: So I want to leave you with that.
• 14:55
  SPEAKER_00: Don't let that peak population story really get you down.
• 14:58
  SPEAKER_00: I think there's more levers and there's more opportunities to see growth in ag demand.
• 15:03
  SPEAKER_00: Doesn't mean it's not going to be slower.
• 15:04
  SPEAKER_00: I'm saying it's still growing and that's still positive.
• 15:07
  SPEAKER_00: You could tell the CEO of Apple that there's they're still gonna have more iPhones being purchased after peak population.
• 15:13
  SPEAKER_00: I think they would be optimistic too, because that's not something that every organization or company can benefit from.
• 15:19
  SPEAKER_00: Keep an eye on the income story, keep an eye on how we use ag resources for non-traditional uses down the road.
• 15:27
  SPEAKER_01: Was that the professor in you that just came out?
• 15:29
  SPEAKER_01: Well said, my friend.
• 15:31
  SPEAKER_01: Well said.
• 15:32
  SPEAKER_01: Looks like we're gonna be doing these every few weeks, and I think you're gonna bring some of your partners in here pretty soon, and you're more than welcome to invite a guest who you'd like to have on, okay?
• 15:41
  SPEAKER_01: Well looking forward to it.
• 15:43
  SPEAKER_01: Sounds good.