With lower production, yields, and acreage, the Jan. 12 USDA reports “should have been a bullish surprise” for corn, says Jerry Gulke, president of the Gulke Group in Chicago and a farmer in Illinois.
Yet the impact proved to be limited, for a variety of reasons. “These crop reports can be a watershed moment sometimes,” Gulke says. “My concern was we’d rallied so much since October—I was concerned if we could get news good enough to continue this rally.”
And, as Gulke feared, the reductions didn’t quite hit the mark, at least in terms of boosting corn prices. “Suddenly the market told us … ‘You cut acres. You cut yield. And you still have 1.877 billion bushels. So tell me something new’,” Gulke suggests. “We can no longer kill the corn acres and yield. It is what is, and if there are any revisions, they’ll be small and nine months from now. “
Listen to Gulke's full analysis here on Farm Journal Radio:
The big numbers in soybeans made the week a bearish ones for beans. With a carryover of more than 400 million bushels, “we still have enough stocks in the bin to offset a weather problem in Brazil,” says Gulke.
It concerns him. “What the market is saying (pending a big weather event in South America) is we’ve got too much. Maybe we’ve got too much of everything. Too much corn. Too much beans,” Gulke says. “Pretty soon we’re at the worst case where neither one makes us a lot of money, unless you had the grain sold in advance.”
With supply matching up with demand, Gulke says growers need to be prepared for price pressure. "We'll have just enough to go around. Nobody gets concerned as an end user except the producer--who may find he gets lower prices next year, barring any weather problem."
It makes Gulke want to watch Mother Nature—the only truly unpredictable factor--“like a hawk.”
"It's going to be up to acres and weather,” he says. “Weather is sometimes more important than the Chinese.”
What do you expect from the grain markets in January 2015 and beyond? Give your opinion on the AgWeb discussion boards.