The grain markets are finally showcasing some positive news. For the week ending Sept. 21, 2018, corn prices are up 5¢ and soybean prices are up about 16¢. These upswings are occurring when prices historically head south. Could a bottom be corn and soybean prices?
“You would think for the moment that the harvest lows are in,” says Jerry Gulke, president of Gulke Group.
It’s no secret U.S. farmers will harvest a huge crop this fall. In fact, nine of the 18 states that produce 92% of the U.S. corn crop are projected to have record corn yields this year. Additionally, U.S. soybean yields are supposed to average a record-high 52.8 bu. per acre.
Gulke says the market has digested these large crops and took prices down to a level to attract demand, or hopefully in the case of soybeans, re-attract China.
“Now you find a home for all the corn and the risk to the upside is probably greater than the risk to the downside,” he says. “There’s a lot you can do with $3 corn.”
“Now if we can find a home for more corn than currently projected, the risk to the upside is probably greater than the risk to the downside,” he says.
Lower soybean prices have also created new (non-Chinese) demand and may have even brought some old demand back, Gulke says.
High yields continue to be reported across the country.
“They just can't believe the yields,” Gulke says. “In soybeans, I think this crop is every bit as good as we think it is—maybe even a bushel better, when we get all said and done.”
Yet even with big crops coming, grain prices are showing strength. Credit the excellent export sales report on Thursday for both corn and especially soybeans, and that’s a positive sign, Gulke says. Wheat still needs to see concrete evidence that more demand will come to the U.S. as a result of crop reductions in the EU, Ukraine and Russia. It's just taking longer than the trade thought.
Follow-through to the upside next week would be a further positive sign of a harvest-time rally
Read and listen to more from Gulke at AgWeb.com/Gulke.