USDA’s Nov. 8 Crop Production and World Agricultural Supply and Demand Estimates (WASDE) didn’t improve prices. December corn was down 12.5¢ and January soybeans were down 6.5¢ for the week ending Nov. 8. December wheat dropped 6¢.
The 2019/20U.S. corn outlook calls for lower production, reduced use, lower exports and smaller ending stocks. Corn production is forecast at 13.661 billion bushels, down 118 million from last month on a 1.4-bu. drop in yield to 167.0 bushels per acre.
Current ending stocks sit at 1.9 billion bushels. “We need to get ending stocks down to around 1.6 to get the market concerned,” says Jerry Gulke, president of the Gulke Group.
Feed and residual use is down 25 million bushels based on a smaller crop and higher expected prices. “Its disappointing feed usage wasn’t increased, even though we have large numbers of cattle, hogs and poultry,” he says.
The U.S. soybean outlook also includes slightly lower production. The updated forecast calls is at 3.55 billion bushels, down less than 1 million on fractionally lower yields and unchanged harvested area. The soybean outlook also calls for reduced crush and higher ending stocks.
“Unfortunately, in soybeans, they lowered exports a little bit,” Gulke says. “Whether they lowered them 1 bu. or 100 hundred million bushels, it tells us that it’s a stretch to try to see that we're going to ship more beans than they already had in place. That's kind of concerning and the market reacted to that by dropping on Friday.”
At this point in the season, Gulke says, the market doesn’t expect big declines in production.
“The problem is that once you grow it, it's there,” he says. “I think the market realizes that we're going to be combining some corn that we really don't need. Even with all the adversity the spring, the crop probably isn't going to change much from here.”
Listen in as Gulke further dissects the USDA report and provides his take on the livestock markets:
Find more written and audio commentary from Gulke at AgWeb.com/Gulke