Corn Markets Shoot Higher after Reports

June 10, 2011 08:09 PM
 

Following Thursday’s USDA reports (see full report coverage), the market was full of action. Jerry Gulke, president of Gulke Group, says Friday was a wild trading day.

“We closed December corn down a little, but well off the lows,” he says. “July corn, which is kind of the lead demand month actually closed at almost $8.”
 
Gulke says that the real action is in cash bids, almost 50 over the July bid. “The problems with cash grain are coming to a head now. Not as much grain is around where people need it, so people are paying higher for it.”
 

The Gulke Group is a market analysis firm at the Chicago Board of Trade. To learn more about them and their advisory services, visit www.GulkeGroup.com

Many factors are contributing to these erratic price moves. Gulke says the threats of Missouri River flooding in a many of the key corn-growing states are causing concern.
 
With the threat of thousands of acres going under water, Gulke says we haven’t heard the end of flooding yet. “Now we’re hearing we have the makings of a flood similar to 1993. What a year and it’s not over by a long shot.”
 

The Lure of $8 Corn

Gulke says the function of the market is to give us an incentive to plant acreage. “Price is a great fertilizer,” he says. “You put $8 corn in front of someone, it makes them pretty excited to get 100 bu./acre instead of 150 bu./acre.”
 
Of course, $8 corn is not a great situation for those looking to buy it. “I look a semi load and say, would I pay $8,000 for that corn? I might do that for enough corn to get you by short-term, but I doubt we have an agriculture infrastructure or ethanol infrastructure that will allow us to may $8 for 13 billion bushels,” he says.
 
With the June 30 USDA Acreage and Grain Stocks reports on the horizon, the market volatility is far from over. “There are a lot of unknowns out there yet,” Gulke says.
 
For More Information
Traders have expected the cold, wet spring in the eastern Corn Belt and northern Plains to cut into corn plantings, but seeing lower acreage in a USDA report still seemed to come as a surprise.
 
Brian Basting of Advance trading offers the full WASDE report numbers and analysis on how markets will react.
 
Bob Utterback of Utterback Marketing --comments WE ARE IN A FULL FLEDGED BULL MARKET!
 
Mike Howlett of Top Third Ag Marketing says the report a little bearish for beans and wheat but bullish for corn. Opening corn old crop 10-15, new crop 15-25 higher. Beans choppy, unchanged to 5 higher. Wheat unchanged to 10 higher.
  
University of Illinois economist overviews the key data in today's reports.
  
Read what people are saying about the reports on the AgWeb Discussion Board.

 

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