Grain in the Bin? Sell Baby, Sell!

November 2, 2012 10:50 PM
 
grain bin sunset

After this week’s private crop reports, the odds seem likely USDA will increase the size of this year’s crop.

If you still have a lot of un-priced grain, market expert Jerry Gulke believes you are swimming in risky waters.

This week two key private firms released crop production estimates. Both groups increased the size of the 2012 crop.

Informa Economics estimates the corn crop at 10.738 billion bushels with a yield of 122.4 bu. per acre. For soybeans, the estimates are at 2.925 billion bushels, with a yield of 38.6 bu. per acre.

FCStone is expecting U.S. corn production to reach 10.881 billion bushels, with an average corn yield estimate of 124.0. In soybeans, the firm pegs soybean production at 2.959 billion bushels, with a yield estimate of 39.1 bu. per acre.

In October, USDA projected the corn crop at 10.706 billion bushels with a yield of 122 bu. per acre. The current soybean crop estimates are at 2.860 billion bushels with a yield of 37.8 bu. per acre.

"FCStone was a little more bearish than Informa," says Gulke, president of the Gulke Group.

On Friday, Nov. 9, USDA will release its November Crop Production and World Agricultural Supply and Demand Estimates. What if USDA comes out and agrees with Informa and FCStone?

"It wasn’t that long ago in September that we were talking 35.3 bu. per acre for soybeans. We have jumped that up quite a bit," Gulke says. He expects USDA to increase the soybean yield estimate.

If the U.S. corn and soybean crops do get larger, the recent high prices aren’t likely to stick around. Gulke says producers need to be ready for USDA to throw a few curveballs next week.

Slap on a Price Tag

With corn prices hovering more than $7.30 and soybean prices exceeding $15.20, Gulke says he has a real hard time holding on to grain. He says unsold bushels equal risk.

We should have made our harvest lows in October and maybe we have. But, we’re not far from them now.

"There are a lot of farmers that just want to keep some grain in the bins to gamble." Gulke says he has between 10 and 15% of his crop unsold at this point. "If it goes up or down $1, it’s not a big deal in the big picture. But, I’m not comfortable holding anything with the technical outlook like it is."

Farmers should also start penciling out their production costs for next year. Gulke says all of his cash rents are going up for next year. So, he’s considering selling some of next year’s crop. "I can still get $6 for my corn next fall. That doesn’t look as good as today’s price of $7.50, but it’s a lot better than $4.50."

Listen to Gulke's full audio analysis:

 

 

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Anonymous
11/3/2012 03:34 AM
 

  Does anyone who is on this site ever say anything but sell? its not like we have a 150bu ave. So we get 2 more bpa big deal.

 
 
Anonymous
11/3/2012 03:34 AM
 

  Does anyone who is on this site ever say anything but sell? its not like we have a 150bu ave. So we get 2 more bpa big deal.

 
 
Anonymous
11/3/2012 07:32 AM
 

  We don't pay them any money so why should they give us any decent report. After all, we farmers can't possibly remember all the bad weather and bad reports. How about the Government report in September that included early harvest in last years carryover AND in the production numbers for 2012!!!! As far as I know, they never corrected that "error". And these private services that want us to believe they have our best interest at heart, give me a break. They are just a tool of the big machine. At this point, most of their credentials are laughable. I have a friend who pays for advice from B....k that talked him into selling corn at 4 something a bushel over a year ago. Another friend has the same company and he presold at those prices for 2 years in advance. They get their inputs paid for and then "lock in" a profit. Perhaps in the long run they will make more than I do but it's going to take a few years to get past this one.

 
 
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