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Crop Conditions on a Cliff, Prices Breaking Records

July 21, 2012
By: Sara Schafer, Farm Journal Media Business and Crops Editor

Hold on to your hat. Corn and soybean prices reached all-time highs this week and could go even higher.

 

For the week, September 2012 corn jumped $0.84 and December corn up $0.55. September soybeans surged $1.44 and November soybeans $1.34. See this week's price movements:

The nearby corn and soybean charts resemble a bottle rocket’s launch pattern:

Corn September 2012 (CBOT)

Sept 2012 corn

Soybeans August 2012 (CBOT)

August 2012 Soybeans

 

Jerry Gulke, president of the Gulke Group, says crops are deteriorating in front of our eyes as each day passes. "This crop is going down fast."

Gulke says he believes the trade is already trading a national corn yield average of 135 bu./acre, but even that number could decrease with new crop condition rating information from USDA.

"Monday morning, we may see the biggest drop in crop condition ratings in corn and soybeans in history. Regardless of whether its 6 or 10 or 12 points down, this crop isn’t getting any better."

How High Will Prices Go?

Gulke says he believes corn and soybean prices will stay on their upward pattern. "We blew through our high of $8, so that means $10 is next. $20 is not out of the realm for soybean prices. It’s going to be easy to manage risk if you have corn and soybeans to sell."

Of course, the big wildcard is still the weather. USDA's Joint Ag Weather Facility’s reports that record-setting, triple-digit heat will persist well into next week across the central and southern Plains. In addition, hot weather will again spread eastward, eventually returning to the southern and eastern Corn Belt and the Mid-South.

During the next 5 days, minimal rain will fall across the central and southern Plains and the middle Mississippi Valley. There will be some occasional showers, however, across the northern and eastern Corn Belt, although most totals will be less than an inch.

On Gulke’s Illinois farm, he was lucky enough to snag an inch rain this week, which dramatically improved the look of his crop, he says. "I got a second chance. Before this rain, I didn’t think my 30-inch-row soybeans were going to close. Now they’ve closed. It’s amazing what soybeans can do if they get the rain."


He says this year is filled with either extreme happiness or despair for farmers, depending on their precipitation levels. "If you got rain, you’re multiplying 200 bu./acre times $8 and cannot believe it. If you haven’t got rain, you’re thinking you might not fill your contracts."

In some areas, farmers are going to get 150 bu,/acre corn yields and in other areas people are going to get zero, Gulke says.

"The eternal hope is things will get better tomorrow, but I think tomorrow is gone in corn. Soybeans are certainly going to look worse than anybody thought in the yield category, probably under to 40 bu./acre for the average national yield."

 

Listen to Gulke’s full audio analysis:

 

 
For More Information
How do your crops look? Submit your report to AgWeb Crop Comments.

Visit AgWeb’s Market Center.

Check your local forecast with AgWeb’s Pinpoint Weather.
 


 

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COMMENTS (4 Comments)

Donald - Yuma, AZ
Prices are really good but don't help much if you don't have any corn or wheat to sell. Hope for more moisture or economically things will really be tough for farmers.
12:48 PM Jul 22nd
 
ngelliss
Where does a 110 average put us?
8:20 AM Jul 21st
 
teakettleking - sumner, IL
Zeroes have a devastating on average yields. I remember the 1953 and 1954 and 1983 droughts here in the Lawrence, Richland, Crawford, and Jasper County area. I know what 7 BPA corn and beans look like. Gobs of corn here will not be harvested and the bean heads will have to have slats bolted on their pickup reels to harvest the mostly podless ankle high beans.
7:43 AM Jul 21st
 
teakettleking - sumner, IL
Zeroes have a devastating on average yields. I remember the 1953 and 1954 and 1983 droughts here in the Lawrence, Richland, Crawford, and Jasper County area. I know what 7 BPA corn and beans look like. Gobs of corn here will not be harvested and the bean heads will have to have slats bolted on their pickup reels to harvest the mostly podless ankle high beans.
7:43 AM Jul 21st
 



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