Following the June 30 Acreage report, corn and soybeans prices showed strength. From the March Planting Intentions report, USDA increased both 2017 soybean and corn acres to 89.5 million soybean acres and 90.9 million corn acres.
The same market strength continued this week. Visit AgWeb's Commodity Market Center.
“We put 14 cents on corn, even though the Acreage report showed 1 million more corn acres than we expected,” says Jerry Gulke, president of the Gulke Group. November soybeans also moved higher.
“The markets began the week, month and new quarter by posting technical gaps higher,” Gulke says. “The low we posted for December corn on Monday was higher than the close on Friday, which was the day of the Acreage report. So when you get a report like that and close above the previous week’s high, there’s a trading gap. You start out with a bang and hold it.”
Gulke says it is rare to see all three market timeframes—the week, month and quarter—gap higher. “We broke out of some trading ranges and it looks like a new paradigm shift,” he says.
These technical market moves indicate a weather market may be underway, Gulke says. The current weather forecasts show hot and dry weather for many key production areas. The market is starting to digest the long-term effects of this weather pattern, he says.
“A weather market can take four to six weeks before the market predicts the worst-case possibilities,” he says. “When a weather market turns—it turns fast.”
USDA’s national average corn yield is 170.7 bu. per acre and the national soybean yield is set at 48 bu. per acre. Gulke says weather challenges across the country could lead USDA to shave those numbers down.
In addition, he notes, many of the corn acreage increases in the June 30 Acreage reports were in states that don’t consistently deliver the nation’s highest yields. “We did not add high-yielding corn ground that would bring average up; it will likely bring the average down,” he says.
Farmers should be ready for the July 12 World Agricultural Supply and Demand Estimates Report (WASDE), Gulke says. The report will reflect the acreage and stocks numbers from June 30. He also encourages farmers to dissect the Crop Progress ratings, which come out Monday, July 10.