Gulke: Soybean Prices Tick Higher On Ho-Hum USDA Report

September 30, 2017 04:00 AM

The latest batch of USDA reports published Friday proved a “ho-hummer” for the most part, though they sent prices for soybeans and wheat in different directions, says Jerry Gulke of the Gulke Group. Soybeans rallied up to 15 cents per bushel after the release of the Quarterly Grain Stocks and Small Grains reports, while spring unexpectedly fell 21 cents.

“The ending stocks on Sept. 1 were reduced about 37 million bushels. That’s good news,” Gulke tells “Weekend Market Report” guest host Jo Windmann in an episode airing Saturday, Sept. 30, 2017, on “We have less to work with, but not much less. We saw a backing off of the price toward the end probably on harvest hedge pressure for next week. How they got there, how they lost 37 million bushels was that 17 million bushels of that was due to lowering last year’s harvested acres and yield.”

USDA raised demand between 17 million and 20 million bushels, though usage for the final quarter of the marketing year—June, July and August—fell compared to 2016 levels.

“We’re losing usage a little bit at about the time the government is saying, ‘But we’re going to ship more and use more next year,’” Gulke points out. “I don’t know if the government is just trying to keep the carryover under 500 million so that they … [don’t] have to revise their projections after many people thinking they totally missed these markets early on due to crop ratings or not. We’ll see what happens Oct. 12,” when the agency’s latest reports will be issued.

Meanwhile, wheat shocked the trade at a time when most observers expected a rally of between 15 and 20 cents.

“My indication would be, and everyone else’s was boy, that wheat just isn’t there, it just isn’t there. Well, it wasn’t there on the western part of North Dakota, maybe from Valley City west it got bad. … in Bismarck, it got really bad,” Gulke says. “But when you got further east in the Red River Valley on into Minnesota, Minnesota actually posted a record yield in bushels per acre and you had some very good yields in northern Minnesota and eastern North Dakota. That offset some of the poorer stuff out west. The net result was in spring wheat, they actually raised the total production by about 12 million bushels.”

The findings challenge the notion producers will plant more spring wheat in the year ahead.

“When you’ve got soybeans up 8 or 9 cents [to close the week] and spring wheat down 20 cents, that just sends a message to the guys that plant spring wheat in North Dakota and in South Dakota and Minnesota and into Canada that we don’t want any more wheat,” Gulke says. “Otherwise, we’d be paying you for it.”

In corn, USDA lowered carryover a mere 60 million bushels, “which isn’t a lot,” Gulke says. 

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