Prices Chart of Illinois Corn, Soybean, and Wheat

2
commodity in the post-World War II and
post-1972 eras. Note that the post-1972
era is assumed to end in November 2006.
For all three commodities, nominal price
levels appear to have jumped to a new
level, rather than a temporary spike, late in
2006.
As shown in Table 1, the average monthly
price of corn increased by 89 percent from
the post- World War II period to the post-
1972 period. The average price of wheat
increased by a similar amount, 79 percent.
The largest increase, 134 percent, was for
soybeans as that crop transitioned from a
minor to a major crop in the U.S. As a
starting point, if average monthly prices in
the new era that appears to have begun in
late 2006 increase by a similar amount over
the post-1972 period, averages would
project to about $4.60 for corn, $5.80 for
wheat, and $14.40 for soybeans.
The relationship between projected corn
and wheat prices appears reasonable,
reflecting a wheat/corn price ratio of 1.26.
That is a little lower than in either of the two
previous periods, but consistent with the
trend towards a lower ratio. The projected
average monthly price of soybeans is likely
too high relative to the other two crops as it
reflects a soybean/corn price ratio of 3.13.
That ratio is well above historic relationships
and above the ratio that makes the two
crops competitive from a production
standpoint. A ratio of 2.5, close to the
historical average since 1973, would result
in an average soybean price projection of
$11.50.
In addition to the average monthly price,
history may provide some insight into the
likely ranges in monthly prices during the
first few years of the current price era. As
indicated in Table 1, the lowest monthly
price of corn in the first 5 years of the
previous two price eras ranged from 66 to
77 percent of the average of the monthly
prices over the entire period. The highest
monthly price in the first 5 years ranged
from 146 to 201 percent of the average. For
soybeans, the lowest monthly price during
the first 5 years ranged from 71 to 81
percent of the average of the monthly prices
for the entire period, and the high ranged
from 161 to 166 percent of the average. For
wheat, the lowest mont hly price ranged from
57 to 96 percent of the average of the entire
period, and the highest monthly price
ranged from 162 to 175 percent of the
average.
The average of the percentage price ranges
during the first 5 years of the previous two
periods and an average price of $4.60 for
corn, $11.50 for soybeans, and $5.80 for
wheat projects to ranges in average monthly
prices over the first few years of the current
era of $3.30 to $8.00 for corn, $8.75 to
$18.80 for soybeans, and $4.45 to $9.75 for
wheat. Using the percentage price ranges
only during the first 5 years of the most
recent period results in projected monthly
price ranges for the current period of $3.00
to $6.70 for corn, $8.20 to $19.00 for
soybeans, and $3.30 to $10.15 for wheat.
The primary differences between using the
most recent period rather than the average
of the two are the projection of the high
price of corn and the low price of wheat.
We believe that projections based only on
the most recent period are more
representative of the likely range of prices in
the future. To aid the reader, average
prices and ranges projected for the future
are presented both in Table 2 and Figures
4-6.
In the period from December 2006 through
July 2008, the average monthly price of
corn in Illinois was $3.93, in a range of
$3.00 to $5.71. The average monthly price
of soybeans was $9.40, in a range of $6.21
to $14.10. The average monthly price of
wheat was $6.09, in a range of $3.97 to
$10.40. To date, then, the average monthly
price of corn and soybeans has been lower
than projected for the new era, but with
prices since early 2008 above the projected
average. The average price of wheat has
been slightly higher than the projected
average for the period.
Page 2/7
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