The long-awaited Jan. 10 reports are only a few days away. Jerry Gulke says these report have a history of putting the nail in the coffin for prices.
On Friday, Jan. 10 at 11 a.m. CDT, USDA will release its Annual Crop Production, Crop Production, World Agricultural Supply and Demand Estimates and Grain Stock reports.
Jerry Gulke, president of the Gulke Group, says this round of reports is known to be a market mover. "As a producer, you have to be concerned with the fact that the January report has a history of putting the nail in the coffin," he says, noting that sometimes the December corn highs are made on the day of the January report.
Hear Gulke's full audio analysis:
Informa Economics recently released its estimates for the Jan. 10 reports. Gulke says the firm increased the corn crop size, over the November forecast, by 173 million bu. For soybeans, Informa pegged the 2013 crop at 71 million bu. above the November forecast.
"That leads one to believe that big crops get bigger, especially crops that mature late in the season," Gulke says. "The market is anticipating a bigger crop."
Larger crops take less pressure of the 2014 acreage mix and also increase the downside risk for prices. "If we come in with 170 million bu. to 200 million bu. more of corn, that’s over 1 million acres of corn that we already have in stock that we don’t have to argue about," Gulke says. "Suddenly you have more grain than you thought."
In this case, Gulke says, the market will won’t worry as much about what is planted, knowing the supply is there. "The market will say that the only chance we have of getting prices anywhere near last year is a crop failure somewhere in the world or in your backyard," he says. "That’s not a good way to start a year."
Overall, Gulke expects the reports to be neutral to bearish. "2014 will probably be a struggle," he says. "We are at or below break-even for a lot of people. We better have some money left over after the four or five years of high profits."
Have a question for Jerry? Contact him at 815-721-4705 or firstname.lastname@example.org.
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Visit AgWeb.com on Jan. 10 for full coverage and analysis of the USDA reports following their 11 a.m. release.