Jerry Gulke says Friday’s USDA reports provided some new information for farmers, but not much support for higher grain prices.
USDA’s June Acreage and Grain Stocks reports have traditionally been a market-mover. And, after one of the wettest planting seasons in recent history, all eyes were on the government’s estimates.
Friday’s reports were not short on surprises. Here are the highlights:
- Corn: 97.379 million acres, up slightly from 2012 and increased from USDA’s March expectation of 97.282 million acres
- Soybeans: 77.728 million acres, up 1% from 2012 and increased from USDA’s March expectation of 77.126 million acres
- All Wheat: 56.530 million acres, up 1% from 2012 and increased from USDA’s March expectation of 56.440 million acres
- All Cotton: 10.251 million acres, down 17% from 2012 and up from USDA’s March expectation of 10.026 million acres
Quarterly Grain Stocks Report
- Corn: 2.764 billion bushels, down 12% from June 2012
- Soybeans: 435 million bushels, down 35% from June 2012
- All Wheat: 718 million bushels, down 3% from June 2012
See full coverage of the June 28 USDA reports.
On Friday, December 2013 corn put in a new low of $5.10.
Jerry Gulke, president of the Gulke Group, says this set of reports show grain prices could continue their trip downward.
"We don’t need a big crop this year," he says. "Now you just have to run the numbers. At what point will we not produce enough corn to meet demand?" He says, as of now, you just can’t reduce the corn crop enough. "There’s some good corn growing out there."
Hear Gulke's full audio analysis:
Gulke says after the reports, he asked himself: What do I know today that I didn’t know yesterday?
"The market told you we aren’t curbing demand as much as we thought, but we’re also not creating much more demand," he says.
He also has his eyes on the weather, which is starting to look a lot better than it has during the last few months. "We should have excellent growing weather for July, and USDA looks at June and July weather to determine yield," he says. "I suspect on July 11, they will raise the national average corn yield."
With several signs pointing to a potential record corn crop for 2013, Gulke says farmers should brace themselves for lower prices. "With Friday’s reports, the credibility for talking about $3.50 and $4 for the fall of 2013 didn’t go away."
Gulke appeared on CNBC Friday to discuss price implications based on USDA’s recent reports. Here’s the clip:
Have a question for Jerry? Contact him at 815-721-4705 or firstname.lastname@example.org.
For More Information
Read more coverage and analysis from the June 28 reports:
AgWeb Radio: Midday Commentary 6-28-13
Kevin Van Trump of Farm Direction says the report numbers for old crop corn were bullish but bearish for new crop corn. More acres of corn to be planted. Not as many acres increase for beans to be planted as estimated.
See current market prices in AgWeb's Market Center