That suggests downward pressure on prices for the near term
Downward pressure on corn prices is likely after the crop posted a key reversal Wednesday following the release of USDA’s Oct. 12 reports, says Jerry Gulke, president of the Gulke Group.
“Maybe we’ve reached the pinnacle on the demand side of this,” Gulke tells Farm Journal Radio host Jo Windmann. “A key reversal down is not good news. You don’t like to see the market close lower on a crop report day.”
Corn yields fell 1 bu. from the September estimate to a national average of 173.4 bu. per acre in USDA’s Crop Production report. U.S. production is down 36 million bushels from a month ago to 15.057 billion bushels.
Yet USDA reported huge exports, steady feed and ethanol. At the same time, the agency reported planted acres up 400,000 acres and harvested acres up just 200,000, suggesting about 200,000 of the acreage went toward silage for livestock or sustained weather damage.
“You may be close to setting record exports in corn,” Gulke says. “We knew we had them coming to us because of South America’s bad crop last year, and they aren’t going to have any exportable supplies until probably March or April, in that area.”
On the soybean side, yields rose 0.8 bu. from the September estimate to a record national average of 51.4 bu. per acre. Soybean production is up 68 million bushels from a month ago to 4.269 million bushels.
“Soybeans are hanging in there pretty well,” Gulke says. “You’re getting up to 395 million bushels of soybeans which, in the whole scheme of things [of] global usage, isn’t very much. But it’s 200 [million] bushels more than you would have liked to see to really get this market on fire from here.”
The U.S. seems to keep finding additional soybean production and buyers for about 2/3 of whatever new crop is discovered, Gulke says. Yet moving forward, it will be difficult to build on that growth simply because it’s unlikely demand can continue to grow, outstripping any further yield increases.
“We continue to see global demand for protein go up, and we’ve seen the benefits of that because we are the only storehouse [for soybeans] in the world, basically,” Gulke says. "This is in spite of the dollar now making new highs almost for the summer. We’ve broken out to the upside, and some people in the financial circles think we’re going higher because it looks like Trump doesn’t have a snowball’s chance of getting in the White House, and that may be good for trade. There is a positive attitude about our dollar, which is not good for agriculture."
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