The corn market’s wild ride continues.
Since May, corn prices have been steadily dropping. But, on Friday, June 6, corn prices shot up to close a dime higher. Could a key reversal be ahead?
"Like it or not, it is a futures market," says Jerry Gulke, president of The Gulke Group. "The job of the market is price discovery."
He says that last fall, the market discovered a price based on a lot of corn left over–around 2 billion bushels. "Suddenly demand came back," Gulke says. Prices have followed suit.
Hear Gulke's full audio analysis:
After a slow start, planting is back to average pace. As of June 1, 95% of the U.S. corn crop has been planted. In the Corn Belt, mild, dry weather is promoting winter wheat maturation, summer crop growth, and late-season planting efforts, according to USDA’s Agricultural Weather Highlights. Beneficial showers and thunderstorms have also returned to portions of the central and southern High Plains.
"Things look about as good as they’ve looked for two to three years," Gulke says. "Outside of people north of I-90, we’ve just about had perfect weather."
The advantageous weather is making many optimistic about this year’s yields. Gulke says many marketing firms are releasing new expectations for corn yields. "I’ve hear someone as high at 172 bu./acre, quantifying it as if we’ve got a good start and we could grow a record crop," he says. "I don’t doubt that."
But, some corn acres have still not been planted. The key question will be: How many didn’t get planted and where?
Regardless, Gulke says, with this year’s decreased corn acres and high expectations for yields, the corn market is at a comfortable place. "You don’t run out of corn, but you also don’t have a huge surplus," he says. "There’s little downside risk to the corn market at this juncture, pending weather developments."
Soybean Planting Pace Picks Up
As of June 1, 78% of the U.S. soybean crop is in the ground. That’s eight percentage points ahead of the five-year average. While some states are closing in on the last few acres, other still have 40% or more acres left to be planted.
"How many soybeans are left to plant and where are those acres?" Gulke asks. "That’s what we’ve been watching in corn every week." He thinks in states that had prevented planting acres last year will continue planting into the middle of June. "After prevent planting, the ground becomes hard to deal with," he says. "The last thing you want to do is leave that unplanted again."
The Word on Wheat
On Wednesday, USDA will release its monthly Crop Production and World Agricultural Supply and Demand Estimates reports. Gulke says this round of reports will mostly focus on wheat.
The spring wheat crop is 88% planted, as of June 1. Gulke says delayed planting will likely curb USDA’s estimate of wheat acres. "I suspect we will come in with 500,000 acres less of hard red spring wheat in the June 30 report," he says. "In the big scheme of things, that’s probably not too important. But, we don’t have a surplus of good quality wheat in this country."
Visit www.agweb.com on Wednesday to find report data and analysis, starting at 11 a.m.
Have a question for Jerry? Contact him at 815-721-4705 or email@example.com.
For More Information
See current market prices in AgWeb's Market Center.