Wet conditions in the eastern U.S. and better growing conditions in the west are offering a split narrative on yield outlook for corn, says Jerry Gulke of the Gulke Group. In turn, traders are undergoing a paradigm shift based on this new reality.
“There’s a tale of two cities,” Gulke tells “Weekend Market Report” host Pam Fretwell in an interview airing Saturday, June 3, 2017. “There’s a pretty good crop in the west, a not-so-good crop the farther east you go and certainly a questionable crop in the northern Plains. Our last two successive record yields have come on nearly perfect weather everywhere, and that’s not the case this year.”
Many observers think it wouldn’t take much to send corn yields below the trendline average, taking carryover beneath 2 billion bushels.
“Some of these people are going to lose 30% of their APH or maybe 35% of last year’s yield,” Gulke says. “I think we’re just a short amount of time before we start to get people running some numbers like [Gulke Group has to demonstrate that] this thing could get serious.”
The question now is how traders will respond.
“We have a lot of speculators short these markets because this thing permeated that, ‘Well, farmers are going to continue to plant, they’re going to plant right on into the first week of June,’” Gulke says. “We always said, ‘I think not. That won’t happen this year.’ When these speculators start to turn, I doubt farmers are going to sell into it.”