User Center
My Training Class
Feedback
Have the grain markets officially turned the corner? They are at least moving in the right direction.
December corn prices were up 11¢ and November soybean prices were up 28¢ for the week ending Sept. 11. December wheat prices were down 7.5¢.
“Prices certainly reacted quicker and faster than I expected, and it was fun watching it happen,” says Jerry Gulke, president of Gulke Group. “Of course, we needed some help from Mother Nature—the dryness, the devastating winds in Iowa and the recent frost in North Dakota. The crops got trimmed back.”
Those reductions in U.S. production are combined with the relentless buying by China of large amounts, which helped boost prices.
“Friday’s close was the 14th straight day of higher closes—something we haven’t seen since 1980,” he says. “It makes you wonder: Have things turned the corner? You can’t argue with the prices.”
On Friday, Sept. 11, USDA released its monthly Crop Production and World Agricultural Supply and Demand Estimates report. Here are some highlights:
Corn: Production for grain is forecast at 14.9 billion bushels, down 2% from the previous forecast but up 9% from 2019. Yields are expected to average a record high 178.5 bu. per harvested acre, down 3.3 bu. from the previous forecast but up 11.1 bu. from last year. Area harvested for grain is forecast at 83.5 million acres, down 1% from the previous forecast, but up 3% from the previous year.
Soybeans: Production for beans is forecast at 4.31 billion bushels, down 3% from the previous forecast but up 21% from last year. Yields are expected to average a record high 51.9 bu. per harvested acre, down 1.4 bu. from the previous forecast but up 4.5 bu. from 2019. Area harvested for beans is forecast at 83 million acres, unchanged from the previous forecast but up 11% from 2019.
“They didn’t do much with the exports for corn,” Gulke says. “They raised it a little bit and lowered the feed and residual and ethanol, which we knew we had coming.”
USDA didn’t alter soybean exports much either, in spite of the record buying from China. “I guess it remains to be seen if China will complete the phase-one agreement,” he says.
The big questions, Gulke says, are: Does China really need the soybeans? Are the purchases just to appease President Donald Trump? Are they buying for strategic reserves? (Gulke’s next Top Producer column dives into this topic even further.)
“These are relatively good prices compared to what we've seen for the whole year,” he says.
Store-Versus-Sell Decisions
As farmers prep for fall harvest, the recent price rally may alter some of the store-versus sell decisions.
“The market is inverting, with front months being higher than the back months rather than a market carry,” Gulke says. “On Friday, September soybean prices went up 40¢, that’s the delivery month. So, it is how critically they need the physical commodity in order to fill export needs. This flip flop is the market’s way of saying, ‘I'm not going to pay you to store soybeans anymore, I need them now.’”
Gulke knows farmers can be reluctant to sell into a higher-moving market. “It's hard to do, but farmers need to look at this and know the market may not pay you to store the soybeans,” he says.
Keep these markets in perspective, Gulke suggests.
“All in all, agriculture looks a lot more promising, P&L-wise than before,” he says. “Mother Nature has a way of changing things, and this is one of the quickest turnarounds that I've seen a number of years.”
Read More
Jerry Gulke: Lessons Learned in 30 Years of Grain Marketing
Jerry Gulke: Will USDA Report Cause Pre-Harvest Lows?
Find more written and audio commentary from Gulke at AgWeb.com/Gulke
Check the latest market prices in AgWeb's Commodity Markets Center.
Jerry Gulke farms in Illinois and North Dakota. He is president of Gulke Group. Disclaimer: There is substantial risk of loss in trading futures or options, and each investor and trader must consider whether this is a suitable investment. There is no guarantee the advice we give will result in profitable trades. Past performance is not indicative of future results.
Report
Share
Comments
Something to say?
Log in or Sign up for free