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Could Low Grain Prices be Behind Us?

August 24, 2013
By: Sara Schafer, Farm Journal Media Business and Crops Editor
crop tour corn sample
  

Corn and soybean prices rebounded this week in response to the Pro Farmer Midwest Crop Tour. Jerry Gulke provides his outlook.


Another Pro Farmer Midwest Crop Tour is in the books. After an intense week of scouting corn and soybean fields across the Midwest, Pro Farmer has provided their estimates for this year’s crop size.

Pro Farmer pegs 2013 U.S. corn crop at 13.46 billion bushels, with an average yield of 154.1 bu. per acre. For soybeans, Pro Farmer pegs the 2013 U.S. soybean crop at 3.158 billion bu., with an average yield of 41.8 bu. per acre.

With its Aug. 12 Crop Production report, USDA pegs the 2013 corn production at 13.8 billion bushels, and the national average yield is set at 154.4 bu. per acre. For soybeans, USDA estimates total production at 3.26 billion bushels. Soybean yields are forecast to average 42.6 bu. per acre.

Jerry Gulke, president of the Gulke Group, says he completely agrees with the soybean estimate. "Pro Farmer’s number is close to what we’ve been using," he says.

For corn, Gulke encourages everyone to read the analysis on how Pro Farmer put together their estimates. "The caveat is that in corn, there is potential," he says, as compared to last year when farmers were already harvesting their corn by the week of the Tour. The weather ahead can still have a big impact on yields.

Gulke says farmers pay close attention to the corn estimate. "This does not represent the lofty crop that a lot of thought was out there," he says.

Hear Gulke's full audio analysis:

 

Soybean Price Outlook

For the week, soybean prices closed more than 40 cents higher for the three nearby contracts. "We started the rally in soybeans a few weeks ago," Gulke says. "That coincided with the drop in condition ratings and overall prospects."

Gulke believes that the market has already started to discount the poor soybean crop. He also reminds that the soybean-planting season in South America is not far away. "They could plant 5 to 7% more soybeans, because corn prices are low," he says.

Soybean stocks could easily tighten up, which would support prices. "We could reach $14 beans, but for all the wrong reasons," Gulke says. "We don’t want to have a short crop and not be able to sell them for $14. Beans have an interesting time ahead of them."

Gulke says the next big round of information will be on Sept. 12, when USDA releases their monthly crop reports. "By September, we should be able to see if we’ve put in the lows for the 2013 marketing year."

 

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

 

For More Information
See full coverage of the 2013 Pro Farmer Midwest Crop Tour, hosted by Pro Farmer.

DuPont Pioneer has been the Tour’s lead sponsor since 2008. Other sponsors include RCIS, Chevy Truck, DuPont Crop Protection, GEOSYS, HTS Ag, Farm Credit Services of America and Montag Manufacturing.

 

See current market prices in AgWeb's Market Center
 


 

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COMMENTS (4 Comments)

db51 - FLORA, IL
It would appear tonight that You're screwed.
11:04 PM Aug 25th
 
db51 - FLORA, IL
It would appear tonight that You're screwed.
11:04 PM Aug 25th
 
Bulldawg - Greensburg, IN
Trade buys the bean story, but not corn. It is sort of ir-responsible comment to suggest U.S. corn yields can fall another 14 to 19 bpa at this point short of a killing frost. ProFarmer deviated some 14 bpa from the 7 states average they survey to get to 154. Even then Mr Guilke admitted demand will be hard-press to keep status quo with a deteriorating crop. Beans will be throttled due to South America. Hard to believe corn get much past $5 even with $14 beans. Corn could be in a tight range until October report.....$4.50-$5.00???
11:54 PM Aug 24th
 
brtthdm - Manhattan, MT
My question is, why is it a bad thing that low prices are behind us? Everyone seems to forget about the end users that have to try feed this overpriced corn to try and make a buck milking cows. It's about time corn prices are starting to come down to a level that might be affordable. I for one am looking forward to lower prices.
8:26 PM Aug 24th
 



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