The corn and soybean markets put in price lows at the end of August, says Jerry Gulke, president of the Gulke Group. Now, traders want to know whether they’ll hold after USDA’s Sept. 12 reports from the National Agricultural Statistics Service (NASS) in which only mild changes in national average yields are expected. Even farther down the road, the October reports from NASS could also shape price movement.
“The Tuesday [Sept. 12] report is kind of looked at as being a ho-hummer, maybe,” Gulke explains. “The average trade guess is that they’ll probably lower corn maybe 1 ½ bu. or so. I think the average guess is 168.2 bu. per acre versus 169.5—a feeble attempt to kind of be on the same side as USDA.”
Meanwhile, soybean yields are projected to stay relatively firm even as demand remains strong.
USDA “may drop [the national average yield] a little bit, maybe 6/10 of a bushel, which is hardly much of a change at all,” Gulke says. “Of course, the ending stocks in beans could come down again because we’ve had good demand this year more than expectations. It seems like we’ve done this now four years in a row.
He continues: “I think the key in soybeans will be, can you lower the carryout of last year, which ended on Aug. 31, which is the carry in. If you drop 30 million bushels, that’s about a half a million acres worth of production. That helps the soybean situation. I don’t think it’s going to happen.”
Also on Tuesday, FSA will announce in the afternoon updated planted acreage for both crops. Gulke notes the market expects less corn acres and more soybean acres—up to 1 million more in Informa’s estimation—when the figures are announced.
Continue to monitor the U.S. dollar for clues to the nation’s overall economy, Gulke says. Although the dollar’s value has been falling this year—which should theoretically make U.S. corn, soybeans and wheat cheaper for international buyers—commodities haven’t rallied.
“It might be [an issue of] who has the stocks and how cheaply are they willing to sell them, rather than the value of the dollar,” says Gulke, pointing to strong production in South America and Ukraine. “When you have overabundance of corn and soybeans, it’s a matter of who can sell it the cheapest. When countries artificially place values on things, that hurts.”
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