If you’re still holding old-crop corn, you may want to take a hard look at your pricing hopes. In today’s World Agricultural Supply and Demand Estimates, USDA researchers added 25 million bushels to the corn carryover, boosting supplies to 1.876 billion bu.
The market’s response? A drop of nearly 8 cents for July futures ($3.5725) and December futures ($375.25).
“There’s not enough time left in this marketing year to get excited unless we get hot and dry in July,” said Jerry Gulke, president of the Gulke Group in Chicago, in a Farm Journal Radio special report. “That [weather] would affect old-crop corn. But if we keep going and meet the numbers—feed usage and so forth—that we anticipated, then we’re going to end up with a significant carryover that’s going to get carries over into next year.”
The size of the 2015 corn crop is also affecting prices. “I think the expectation of the trade is that there’s a big crop coming,” said Gulke. “Is it as big as last year? According to the government, we’ll have less carryover than this year, which means we’ll go across at 166 bu. per acre—that’s what they are estimating.”
Listen to Jerry Gulke's full comments here:
Acreage, however, remains a big unknown as farmers and traders await the June 30 acreage report. The USDA “has a little higher number acreage number than we have—about a million acres too much—and the market is still looking at that,” said Gulke. “There might be some switching of corn to beans or to sorghum.”
In contrast to corn, soybeans dipped just 2 to 3 cents on July and November futures after today’s USDA reports. The agency reduced the soybean carryover by more than the trade expected, slicing 20 million bu. to land at 330 million bu. for the 2014/15 crop year and cutting 25 million bu. for the 2015/16 crop to reach 475 million bu.
“If you look back for the last few years, the one thing that we’ve seen happen in the marketplace is that just about everybody, including Informa and the private guys, has underestimated the demand for U.S. beans and maybe (global) demand for beans,” Gulke said.