Friday’s reports confirmed the U.S. corn and soybean crops are huge. Jerry Gulke provides his take on what that means for prices long-term.
After a prolonged lack of crop size and demand information, USDA provided the market with its updated Crop Production and World Agricultural Supply and Demand Estimates on Friday, Nov. 8.
Here are the highlights:
Corn: national average corn yield is 160.4 bu./acre, up from the September estimate of 155.3 bu./acre. Total production is 13.989 billion bu., which compares to September estimate of 13.843 billion bu. and 10.780 billion bu. in 2012. USDA puts harvested corn acres at 87.232 million, down 1.903 million acres from the September estimate.
Soybeans: national average soybean yield is 43.0 bu. per/acre, up from the September estimate of 41.2 bu./acre. Total production is 3.258 billion bu., which compares to September estimate of 3.149 billion bu. and 3.015 billion bu. in 2012. USDA puts harvested soybean acres at 75.688 million acres, down 690,000 acres from the September estimate.
"You have to understand we raised the yield and lowered the number of harvested acres," says Jerry Gulke, president of the Gulke Group. "So, that basically put corn production up about 150 million bushels." He says corn demand was also raised.
Demand for soybeans and soybean meal was also increased. "Beans are what they are, since they are all pretty much harvested (as of Nov. 3, USDA estimates 86% of the U.S. soybean crop has been harvested)," Gulke says.
Hear Gulke's full audio analysis:
When Too Much is a Bad Thing
Even though corn and soybean prices all closed higher on Friday, Gulke says Friday’s reports don’t show long-term price support.