Jerry Gulke: USDA Shock and Awe

March 29, 2019 03:14 PM

The March Prospective Plantings report is known to shake up the markets. This year’s report, unfortunately, made prices tumble. For the week, corn prices were down 20¢, and soybean prices were down around 19¢. Why did prices fall so far and so fast?

The Plantings report, combined with the quarterly Grain Stocks report showed the U.S. has too much of everything, says Jerry Gulke, president of the Gulke Group.

Here are the highlights of the reports for corn and soybeans:


  • 92.8 million acres, up 4% or 3.66 million acres from last year
  • Stocks in all positions on March 1, 2019 totaled 8.60 billion bushels, down 3% from March 1, 2018


  • 84.6 million acres, down 5% from last year
  • Stocks in all positions on March 1, 2019 totaled 2.72 billion bushels, up 29% from March 1, 2018

“By the way corn went down, it shows this was obviously a shock,” Gulke says. “This is going to be a shock to bankers too, because it just lowered our gross income, no matter what your costs are—at negative 20¢ for the week on 200 bu. corn, that’s $40 an acre. That's nothing to sneeze at. We need a weather problem now, and we need China. We need China probably more than they need us.”

In terms of corn demand, Gulke says, China would need to make significant purchases.

“If China would come in and buy 10 million metric tons of corn, not 300,000 tons, that gets us back to probably a 1.8 billion bu. carryover, if they bought it all this year,” Gulke says. “In this week’s corn ending stocks, we found 238 million bu. of extra corn. If you think about China buying 400 million bu., we found over half of that in the bin. So, it makes it that much more difficult for a significant move in corn prices, unless we can cut the yield.”

For soybeans, Gulke says, the reduction in acres made sense. But, it’s likely not a big enough decline.

“Remember that 1 million acres of soybeans is only about 53 million bu., when you've got half a billion too much. You’d like to get the carryover down to under 500 million. We need to reduce soybean acres by 10 million acres, not just 3 million or 4 million.”

Looking forward, the markets need a weather problem to turn prices around. At the Gulke Group member conference this week, Drew Lerner, senior ag meteorologist and president of World Weather, presented his weather outlook.

Gulke says his big takeaway was this wet weather pattern looks to be sticking around. 

Given the wild day in the markets, Gulke will publish a Technically Speaking column next week. Read and listen to more from him at 

Read More

Quarterly Grain Stocks: Corn Down 3%, Soybean Up 29%

Prospective Plantings: Corn Up 4%, Soybeans Down 5%

Grain Stocks: USDA Finds More Grain Than the Market Expected

Grain Stocks Surprise, Acreage Report Underwhelms

Vaclavik: This Report Is Really Not Constructive for Anything

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Spell Check

Lubbock , TX
3/31/2019 09:08 PM

  Dave, that’s my point. Farmers, not the USDA, have to decide planting fence row to fence row has to stop. In the ‘60s while I was growing up farming the USDA enforced a paid set aside program. Farmers couldn’t stand it & got it terminated. Meanwhile some of them plowed up thousands of acres of marginal grass land & planted it turnrow to turnrow. They went broke & the USDA came out with the CRP program. Again, as prices rose more than a few plowed it up. Same old cycle. One big difference is today farmers are at best 5% of the vote. In the ‘50s it was close to a third of the vote. Guess what? No check in the mail is coming. Farmers are going to have to remove the over production themselves. And your right, trying to live on exports isn’t going to work. By the way, the US no longer owns or controls the big Ag Corporations. Think Bayer, it’s German.

Auburn, IN
4/1/2019 08:57 AM

  Steve, looks like we agree on alot of issuses, we need set-aside acres, maybe 10%, tied to crop insurance and goverment programs, more crp acres , all support to illegals stopped, take all that billions of dollars to support agriculture and other needy programs for Americans in need, and stop all agriculture payments to the wealthy non farmers- investers in agriculture

Bird Island, MN
3/30/2019 01:37 AM

  I don't believe nothing the usda puts out its all just smoke and mirrors. the traders better just keep doing what there doing ,they will be sorry, because food shortages are comingRead about the Grand solar minium..


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