With a massive corn crop being harvested and a continued waiting game for government reports, the market is waiting to see how that grain will be used, says Jerry Gulke, president of The Gulke Group, in the Weekend Market Report.
"The government report on Nov. 8 will tell us a lot," Gulke explains. "We may be looking at $4.65 or something like that being the high or being wishful thinking going down the road if this crop turns out to be as big as we think in corn."
It’s an unusual corn market, for sure, made more challenging by rumors that the U.S. Environmental Protection Agency might cut its mandate for biodiesel, in addition to ethanol, Gulke says. Nonetheless, opportunities remain.
"If what we see is true and what we think is true, we’re going to have too much and still be able to reward the market with extra feeding and extra exports," he says. "There’s a lot more questions now as to whether we’re going to increase feeding as much as we thought because we just don’t see those cattle coming back as quick. So that’s tentative yet. But it’s probably not off by more than 100 million bushels here or there in exports."
In particular, analysts will watch to see whether China fulfilled market expectations by making corn purchases using an Oct. 31 report from USDA as their guide.
"We get the accumulation of about three weeks’ worth of export sales that we haven’t seen yet," Gulke says. "We in the market believe that China bought a lot of stuff, and so we’d better come up with export sales that look good and the market will look at it and say, ‘OK, that’s fine, what have you done for me lately? What are you going to do for me next week and next month?’ The acres and the yield are going to have a big influence."
Click the play button below to hear Gulke’s full analysis, including his take on how much grain farmers will hold and the role of new crop insurance indemnities information: