TAGS: Marketing, Overseas
December 18, 2014
The fireworks came a week late for the grain markets. December corn jumped 18¢ for the week ending July 12, with November soybean up 37¢ and December Kansas City wheat up nearly 20¢.
In the July Crop Production and World Agricultural Supply and Demand Estimates (WASDE) reports, USDA made few revisions, acknowledging more information will be shared in next month.
For corn, USDA kept the national average corn yield at 166 bu. per acre. The season-average corn price received by producers is lowered 10 cents to $3.70 per bu.
For soybeans, USDA did lower the national average yield to 48.5 bu. per acre—down 1 bu. based on delayed planting progress. The 2019/20 season-average price for soybeans is forecast at $8.40 per bu., up 15 cents from last month.
“The report, to me, showed USDA sees a problem out there, but they aren’t ready to pull the plug yet on these crops because there’s a lot of time left,” says Jerry Gulke, president of the Gulke Group.
Kansas City wheat up being up for the week is a clue of end user concern, Gulke adds.
“In the Southwest, wheat competes as a feed grain,” he says. “As I understand it, they are starting to feed wheat in some of the cattle feedlots in anticipation of what a lot of the end users see coming—it may be difficult to get their hands on the actual commodity down the road.”
Weather Market 2.0
After the report, the markets returned their focus to weather. The latest forecasts show hotter-than-normal and drier-than-normal conditions for the next six to 10 days.
“This small corn that’s out there is probably in jeopardy,” Gulke says. “It doesn’t have the root system and the ground isn’t shaded. And that ground is hot, with temperatures up in the 90s.”
With soybeans, he says, short plants can still yield a decent crop. “But I’ve not recalled a time before when I’ve seen beans this short this time of year. I don’t have beans yet that are over knee-high.”
As a result, soybeans could take a hit. “We just don’t know yet,” Gulke says. “If it rains like crazy in August, they could come roaring back.”
While Gulke has been reluctant to think this year’s corn and soybean crops are as bad as people say, the latest reports he’s seen point to significant issues.
“We are in Weather Market 2.0 now,” he says. “Now we’re in a hot weather market, and if we see crops start to deteriorate it will really takeoff. If July makes new highs over June, that tells you we have a problem.”
Gulke says farmers should take a look at the movement in the December corn chart. (Click to enlarge)
Find previous audio and written reports with Jerry Gulke at agweb.com/Gulke
Jerry Gulke: Was This the Pause That Refreshes the Markets?
Jerry Gulke Takes A Long-Term Look at Corn Prices
Technically Speaking: Production Destruction vs. Demand Reduction
Check current market prices in AgWeb’s Commodity Markets Center.