A major force is required to turn such a big ship. For the past three months, the corn-price ship has been barreling straight ahead, trading in a fairly narrow sideways trend. But, that ship took a positive turn, says Jerry Gulke, president of the Gulke Group
“There are a lot of unknown left in these markets,” he says.
But, as the calendar creeps into June, the weather picture is beginning to crystalize. Farmers in many states saw excessive rain, causing many acres to be replanted (sometimes twice). Additionally, this weekend is calling for hot and dry weather for many key production areas.
“We will have corn pollinating all of July and August,” Gulke says. “Now, we will need perfect weather for the remainder of the growing season, just to maintain average crop [yields].”
The markets have already absorbed some of this negative weather news. December corn prices have broken out to the upside to above $4, after trading sideways for three months—and have held there pretty consistently, Gulke notes.
“That’s a new paradigm shift in thinking,” he says.
June 9 USDA Reports
USDA issued its monthly Crop Production and World Agricultural Supply and Demand Estimates (WASDE) reports on June 9.
Overall, few surprises surfaced from the reports, Gulke says.
“There was a little reaction prior to its release,” he says. “Corn continued to go higher and beans were reluctant to go down.”
In the report, Gulke says, USDA didn’t significantly change any of the supply and demand numbers.
“Even though they raised the global soybean supply and global corn supply, they left exports the same,” he says. “That means there is good demand at these prices.”
Within a half-hour after the reports were released, the market was back to trading weather, Gulke says.
Next up will be the June 30 Grain Stocks and Acreage reports. Gulke says farmers should be ready for a “blockbuster” report at the end of the month.