Grain prices dipped, then turned around following this week’s USDA reports. Jerry Gulke believes they still have upside potential.
USDA released its September World Agricultural Supply and Demand Estimates (WASDE) and Crop Production reports on Wednesday, Sept. 12.
Overall, the report had a negative tone. Here are the highlights for corn and soybeans:
- Corn production is forecast at 10.7 billion bushels, down less than 1% from the August forecast and down 13 percent from 2011.
- Corn yields are expected to average 122.8 bushels per acre, down 0.6 bushel from the August forecast and 24.4 bushels below the 2011 average.
- Soybean production is forecast at 2.63 billion bushels, down 2% from August and down 14% from last year.
- Soybean yields are expected to average 35.3 bushels per acre, down 0.8 bushel from last month and down 6.2 bushels from last year.
Jerry Gulke, president of the Gulke Group, says corn initially fell after Wednesday’s report, but then turned around at the end of the week.
"We may have put in the seasonal lows for corn for the year. We’re going to have to see the October report."
For soybeans, Gulke says he was surprised that USDA lowered yields. The expected lower supply will definitely test demand.
"As you calculate the meal demand worldwide, there’s not movement left in the downside for demand. There’s a good possibility we may have to import meal next year."
Gulke says overall, the week was profitable for grains. "We’ve had a good week. You need to have a positive response to a negative report, and in corn we got that." See this week's market movement data: Tight Range for Corn Prices Ahead
News on the Economy
Of course, the other big news of the week came from the U.S. government. This week, the Fed announced its plan to buy $40 billion in mortgage-backed securities for an unspecified amount of time.