Grains Stabilize Despite Chinese Corn Stocks Doubling

November 9, 2018 04:58 PM
 
 

Corn and soybean prices closed the week on a steady note. For the week ending Nov. 9, corn prices were down about 1¢, while soybean prices were up 1¢ to 3¢, depending on the contract.

This stabilization in prices occurred amidst the monthly edition of USDA’s Crop Production and World Agricultural Supply and Demand Estimates reports. On Thursday, Nov. 8, USDA lowered both the total corn production and national average yield. Currently, corn yields are expected to average 178.9 bushels per acre, down 1.8 bushels from the October forecast.

For soybeans, the national yield and production was also lowered. The current soybean yields estimate is 52.1 bushels per acre, down 1 bushel from last month.

“This would have been a good report, but USDA found that Chinese stocks are nearly double what we thought—nearly 6 billion bushels more,” says Jerry Gulke, president of the Gulke Group. “That’s nearly three times the carryover that we have here.”

This news from China hurt the market, he says. “Corn fell like a rock before it rallied back up.”

For soybeans, the lower national yield would also have been a positive for prices. But, USDA lowered exports by 160 million bushels. “That was kind of a shocker; I thought it would be more gradual than that,” Gulke says.

Basis bids are starting to improve—just slightly.

“I sell my beans in northern Illinois,” Gulke says. “My basis was 93¢ at the start of the week and now it’s at 86¢. But we’re not talking narrowing it from 39¢ to 32¢.”

Regardless, this year proves that n-farm storage pays, he says. “It has paid for the last 30 years.”

Looking forward, Gulke says, market moves will likely be due to news from President Donald Trump. Any tweets or updates (like the one on Nov. 1) about positive moves in trade discussions will likely send prices higher.

“It will be a psychological push, like we had last week,” Gulke says. “We could get another 40¢ or 50¢ if we can continue to get some positive tweets. The market wants to hear some good news.”

In the meantime, Gulke encourages farmers to run several cash flow scenarios for corn and/or soybeans in 2019.

“We’ve got a holding power, but you need to start making plans for different cash flow situations that are going to come whether they make a deal or not,” he says. “There's going to be bills to pay.”

Gulke will return next week with his in-depth market commentary. You can find it, as well as all of his audio commentary, at AgWeb.com/Gulke.

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Comments

 
Spell Check

Rick
Jonesboro, AR
11/10/2018 08:28 AM
 

  George is right about USDA. They seem to always come up with negative news for the market. After awhile, one has to wonder if it's intentional!

 
 
Dave
Auburn, IN
11/10/2018 08:47 AM
 

  do to all the polital hate against Trump, one has to wonder if there are anti Trump people in the USDA trying to hurt Trump and the Midwest for surporting him, how better to do this as to hurt us farmers and turn us against him

 
 
Corn & Soybean Grower
Kouts, IN
11/10/2018 09:54 AM
 

  STOP THE POPUPS!!!!! I already am subscribed to AgWeb's emails. Getting really frustrating! Also, what is the QUALITY of the Chinese corn stocks? I've read before that some of their corn is really old & in very poor condition.

 
 
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