Today’s crop production and supply–demand reports raised U.S. corn yield to 165 bu. and soybeans to 44 bu./acre. Those may be the biggest numbers we see, says Jerry Gulke of the Gulke Group. "Darrel Good, ag economist at the University of Illinois, thinks corn could be as low as 158 bu. due to night heat, tip back, the number of kernels being worse than usual and so on. These numbers are based on surveys. By the September report and especially October, we’ll begin to get reports of actual yields."
But demand for corn, wheat and soybeans all were raised, in recognition that the world will come to the U.S. for supplies, Gulke adds. "USDA shows total corn use at 13.5 billion bushels. The question is how much of this is already dialed into the market at these prices.
"Soybeans and meal could be the big story in the longer term," Gulke believes. "I’ve seen some who believe China could import as much as 58 to 60 million metric tons. They’d have to import roughly a million tons a week."
Looking at charts, Gulke says "We had better close higher today. A lower close would make me confident I made the right decision when I made some sales and confident about keeping hedges in place. I think we are at a place where we’ll see buyers come in on dips and farmers willing to sell 40% to 60% on rallies to meet expenses between now and spring."