Jerry Gulke provides his pre-report analysis for the Aug. 12 Crop Production and World Agricultural Supply and Demand Estimates reports.
On Monday, USDA will release its monthly Crop Production and World Agricultural Supply and Demand Estimates. Jerry Gulke, president of the Gulke Group, says this report could hold some major market-moving surprises.
With this round of reports, Gulke says USDA talks to farmers, looks at fields and factors in the weekly crop condition reports to generate an estimate for this year’s crop size. USDA looks at the crop’s status and then factors that in to what it means for yields.
"They do a very comprehensive job," he says. "They do the best job of anyone out there because USDA has the most manpower and data."
The corn and soybean markets have been trending lower. "We will need a big surprise in the August report to reverse these markets," Gulke says.
Hear Gulke's full audio analysis:
Here are three potential surprises:
Corn Yield Estimate
Gulke says while there are some areas of the country that have poor or very poor crop condition, for the most part this is a solid crop.
"I think I have grossly underestimated my potential yield out there," he says. "I think there are some fields that will blow our socks off in terms of high yields."
In 2009, Gulke says, USDA increased the average corn yield estimate by 6 bu./acre from their July to August estimates. He says this year is comparable to 2009, in terms of weather, and in most cases, this year’s crop is in better shape.
Last month, USDA announced it was going to collect addition information about the amount of soybean acres in 14 states. NASS collected soybean acreage information during the first two weeks of June and published this information in the June 28 Acreage report.
But, at that time, a large portion of the acres had not been planted. This new information will be included in Monday’s reports.
Gulke said Informa has reduced their soybean acre estimate by about 500,000.
"The general perception is that if soybean acres increase 1 million acres, then they must have taken them away from corn acres," Gulke says. "We will get a better handle on bean acres."
Regardless of where the number comes in at, Gulke says soybean prices have dropped a lot in the last few weeks. "Apparently the market is not worried about lower acres."
What About Iowa?
Gulke says the crops in Iowa are far from perfect due to lots of weather-related challenges and some acres were left idle. And, Iowa does lead the country in corn production.
"They have 14 million acres of corn growing there," he says. "If they drop 30 bu./acre, which is a pretty good hit, that could be a 350-million-bushel drop." While that is a big drop, Gulke believes other states could make up the difference.
"Generally harvested acres are around 8 million acres less than we plant. USDA factors that in," he says.
Have a question for Jerry? Contact him at 815-721-4705 or firstname.lastname@example.org.
For More Information
AgWeb will have full coverage of the Aug. 12 reports, following their release at 11 a.m. CDT.
See current market prices in AgWeb's Market Center