Talk about bullish USDA report. After Tuesday’s release showed a lower than expected carryover for new-crop soybeans, the market responded with a nearly 60-cent jump in soybean prices and sustained strength through the week.
“Soybeans closed at near the highest closing level since August 2014,” said Jerry Gulke, president of the Gulke Group, speaking with Farm Journal Radio’s Jo Windmann. “What is it about soybeans that would make them worth more than they were worth two years ago?”
The answer this week was demand, due to higher than projected exports and lower production in South America, according to USDA’s World Agricultural Supply and Demand Estimates for May.
Corn got a boost, too, this week, with December futures rising to $3.98 at Friday’s close.
“Corn has joined soybeans in that upward trend,” said Gulke. “…We’re an eyelash away from $4 corn on the Board of Trade, which means $4 cash for some people somewhere in the United States with flat basis for fall delivery.”
That trend bears watching. “We are getting to the point now where everyone has talked about how much overhead resistance there is at $4,” Gulke says. “Should we blow through that on Monday for whatever reason … you gotta start asking yourself ‘What is going on with corn?’”
Listen to Gulke’s full comments here, including his thoughts on whether or not producers are switching acres to soybeans, given those higher prices.
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