Bearish Expectations for USDA Reports Prove Overly Negative

The outlook for corn, soybeans, and wheat may not be quite as negative as expected, based on the numbers in Tuesday’s USDA reports and the market’s reaction.

“We heard a lot about how short the market was and how negative the psychology was—not just in your grains, but all commodities. Of course the stock market and China hasn’t helped,” said Jerry Gulke, speaking to Farm Journal Radio in a special report. “Now we’ve got something that’s not so negative.”

Quarterly grain stocks for corn, for example, were slightly less than the trade anticipated. So were quarterly stocks and ending stocks for soybeans. Winter wheat seedings dropped by nearly 3 million acres, even more than the trade expected.

Listen to his full comments here:

As welcome as such news was to farmers tired of low grain prices, though, Tuesday’s data releases didn’t quite fall into the bullish category either.

“If you look at the bottom line with 440 million bushels of beans left over, that’s pretty big. That’s twice as much as last year,” said Gulke, who is president of the Chicago-based Gulke Group. “In corn, it’s about the same as last year—maybe a little more. But I look at the usage side of it, and I think the government is trying to give us the benefit of the doubt on usage because globally, we lowered the corn stocks … for all producers,” including South America.  Still, U.S. corn ending stocks of 1.8 billion bushels “leaves plenty of room for the markets to absorb a shock,” whether it’s weather-related or something else, he said.  

It’s a market situation that leaves Gulke recommending patience for anxious producers.

“This could have been a lot worse,” he said. “This is a good time to be patient. It’s not a good time to make a major decision when you are staring negative returns in the face. We have a lot of planting and growing ahead of us in 2016 in a year already filled with uncertainty.”