Imagine smoke rolling out of an oven door. That has been a painfully accurate metaphor for commodity prices this summer. Will there be any salvageable profits left once the 2016 markets are done “cooking”?
In the latest World Agricultural Supply and Demand Estimates Report (WASDE), issued Sept. 12, USDA did lower corn yield expectations by 0.7 bu. to a projected national average of 174.4 bu. per acre. But will that be enough to significantly cut into existing stockpiles? Jerry Gulke has his doubts.
“I think the bottom line is that it’s going to be very hard to get demand to go up a lot between now and next summer to make corn stocks tight,” says Gulke, president of the Gulke Group in Chicago. “You’ve just got about a billion bushels too much corn.”
For soybeans, meantime, USDA revised national average yield estimates upward to 50.6 bu. per acre.
“Beans look really good – we’ve heard that from everyone out there,” Gulke says.
But impressive demand brings a silver lining to the soybean market, he adds.
“Our ending stocks went up only 35 million to 365 million, even with producing another 140 million bushels,” he says. “What would have happened had that yield been unchanged? We would’ve had a real bullish report.”
Gulke still thinks there’s rally potential later this fall, including corn prices that could push closer to $4, along with a “dollar rally” in soybeans. Listen to Gulke’s exclusive audio report below to find out what ingredients he thinks need to be present for a rally recipe.