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Don’t Bet on a Bean Price Bump

September 7, 2013
By: Sara Schafer, Farm Journal Media Business and Crops Editor
8 23 12 MI soybeans
  

The market will be hit with another round of USDA reports Sept. 12. Jerry Gulke provides his pre-report pricing advice.

On Thursday, Sept. 12, USDA will release its September Crop Producer and World Agricultural Supply and Demand Estimates. Jerry Gulke, president of the Gulke Group, says these reports could hold some market- shifting information.

The soybean market could hold the biggest surprise, Gulke predicts. "We are narrowing the time frame that we can either make or kill the crop," he says. "At this point, it will be what it is."

Hear Gulke's full audio analysis:

 

His advice is to watch what USDA does with the exports and other usage. Demand will be key, considering soybean supply is large. "If you look at what we’re going to grow in the U.S., even with a 41 bu./acre national average, and what South America has left over and what the U.S. has left over, we have 500 million bu. more soybeans going into Sept. 1, than we had last year."

What will this mean for prices?

"Do we really think that $13 beans will go to $16? I told my guys that I don’t want any beans on my farm at $14," he says. "My bean bins will be empty at $14."

Gulke says that with South America’s large soybean supply, they will stay competitive, with U.S. prices, through this fall.

"If I was going to sell anything, I’d sell the beans. Get rid of them," he says.

For corn, Gulke says farmers need to prepare for a large U.S. crop. "We’re going to grow a lot of corn this year, whether we get 150 bu./acre or 160 bu./acre or somewhere in between," he says.

Gulke is keeping his eye on U.S. corn demand. "The demand prospects by USDA need to be monitored pretty closely. Every report since February has lowered the prospect for demand of U.S. corn," he says.

The most likely situation, Gulke believes, is for corn prices to stay depressed. "I don’t see a lot of hope for corn. My concern is we are going to be plagued with a lot of corn for a while. Next year, if we get a decent crop, it could get worse."

The only silver lining is these are not uncharted waters for the corn market. "We’ve been through this before," Gulke says. "It typically takes 3 or so years to get out of this mess once we have oversupply. It is an interesting situation. It is a major difference from a few years ago."

Following the report, Gulke advises farmers to be sure and watch the market close. "We need a drastically bullish report," he says. "If the market closes and collapses on good news, there is a lot more in this market that is negative that I anticipated a year ago."

 

Have a question for Jerry? Contact him at 815-721-4705 or jerry@gulkegroup.com.

 

For More Information
AgWeb will have full coverage of the Sept. 12 reports, following their release at 11 a.m. CDT.

See current market prices in AgWeb's Market Center
 


 

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