Jerry Gulke: Finally, A Positive Reaction A Negative Report

02:53PM Apr 09, 2020
Jerry Gulke WMR 640x500
This month’s World Agricultural Supply and Demand Estimates provided few rays of optimism for the grain markets. Yet, prices closed the week on a mostly positive note.
( AgWeb )

This month’s World Agricultural Supply and Demand Estimates provided few rays of optimism for the grain markets. Yet, prices closed the week on a mostly positive note. July corn showed no change for the week ending April 9, while July soybeans were up 11¢ and July wheat was up 13¢.

“It was one of the reports that wasn't friendly, yet corn didn't close lower, and beans closed up,” says Jerry Gulke, president of the Gulke Group. “We finally got a negative report and a positive response, so something underlying in there is, is the market doing its thing.”

For corn, USDA calls for reduced imports, greater feed and residual use, lower food, seed, and industrial use, and larger stocks.

  • Feed and residual use is raised 150 million bushels to 5.675 billion.
  • Corn used to produce ethanol is lowered 375 million bushels to 5.050 billion based on the latest indications from Energy Information Administration data indicating an unprecedented decline in ethanol production and motor gasoline consumption as a result of COVID-19.

“The debate ahead of the report was can we raise feed usage enough to offset the demand destruction in the ethanol market, which has literally collapsed? That didn't happen,” Gulke says. “I think a lot of the data USDA and NASS used to compile this report was collected before the big drop in ethanol happened in the last two weeks.”

Gulke expects ethanol usage to drop again in May and for many of the following months. 

For soybeans, USDA expects lower exports, seed use and residual use, higher crush and higher ending stocks.

  • Soybean exports are reduced mainly on strong competition from Brazil.
  • Soybean crush is raised on higher soybean meal exports and increased domestic disappearance.
  • Domestic soybean meal use is forecast higher with an expected reduction in available supplies of DDGs resulting from lower ethanol production. 

Here’s an overview of the U.S. ending stocks (in bushels):




Pre-Report Estimates


2.09 Billion

1.89 Billion

2 Billion


480 Million

425 Million

460 Million


970 Million

940 Million

940 Million

Source: USDA

“We’re increasing stocks going into the new marketing year,” Gulke says. “Now the job of the market is to try to tease some of those acres out of corn into soybeans.”

As the calendar approaches mid-April, the markets will start focusing on the weather forecast. Even though the forecast looks wet and cool for many parts of the Midwest, don’t expect prices to jump, Gulke says. 

“The market doesn't believe we can’t get a crop planted until it is happening,” he says. “Last year, we got everything planted, and even though we planted corn in June we still had a fairly decent crop.”

The six-to-10-day weather forecast on Monday will be telling. 

“If you get wet and cool forecast, all of a sudden you’re approaching the last week of April and wondering if you’re going to plant this month; it might get touchy then,” Gulke says. “I think the first time you see an opening in the weather market, that'll probably affect the price of corn. Soybeans may be supported because if farmers can plant corn, they won’t plant soybeans.”

Be sure to watch for marketing volatility during the upcoming three-day weekend.

“Anything can happen,” he says. “We’re getting more and more data on the coronavirus showing maybe we’re close to the top and things may not be as bad as we thought. So that could reverse on us. If the news isn’t positive, that will continue to hurt the stock market, oil and so forth because that delays the opening up of the economy.”

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Jerry Gulke farms in Illinois and North Dakota. He is president of Gulke Group. Disclaimer: There is substantial risk of loss in trading futures or options, and each investor and trader must consider whether this is a suitable investment. There is no guarantee the advice we give will result in profitable trades. Past performance is not indicative of future results.