Corn prices exceeded $5 this week and market expert Jerry Gulke says the downside risk has been reduced at least for a while.
Even if Midwest farmers are still several weeks away from planting, they can celebrate improving prices. Old- and new-crop corn surpassed $5 this week, and old-crop soybean prices have remained above $14.50.
These prices followed Monday’s friendly round of USDA reports. In its annual Prospective Plantings reports, USDA predicted 91.7 million acres of corn (down 4% from 2013), 81.5 million acres of soybeans (up 6% from 2013), 55.8 million acres of all wheat (down 1% from 2013) and 11.1 million acres of cotton (up 7% from 2013) for 2014.
Overall, the theme was less corn and more beans, says Jerry Gulke, president of The Gulke Group. "When corn prices dropped down to $4, farmers took that market signal and said we would plant less corn," he says.
Gulke says that since so many farmers have a large percentage of their 2013 corn production still in the bin, it made more financial sense to plant more soybeans this year.
Yet, he believes acreage numbers will continue shift this year. "There are still some questions about these numbers. There seem to be 2 to 4 million acres missing," he says. "It’s as if the government is saying there will be more prevent plant acres."
Hear Gulke's full audio analysis:
Strong Demand Prevails
The strong closes for corn and soybean prices after the March 31 reports show Gulke that demand for U.S. grain is high. "We’ve turned a corner in this thing where it’s not so much how we think prices are going to go, but we know where prices aren’t going to go," he says. "We found out that you can use $4 corn in a lot of ways."
Demand for corn exports has doubled, Gulke says, and there’s no indication that demand for feedstuffs will decrease. "Now we’re to where we need to get a decent yield, 158 bu./acre or better, on the acres we intend to plant or we could end up with another year of looking at carryout like this year’s," he says. "That throws the whole myth away about $3.50 corn."
Gulke says farmers should carefully analyze the next set of supply and demand numbers that will be issued on April 9 in USDA’s World Agricultural Supply and Demand Estimates. "Other countries got along without our corn but now with the chance to buy cheap U.S. corn, they are coming back," he says. "We are more reliable."
Have a question for Jerry? Contact him at 815-721-4705 or firstname.lastname@example.org.
For More Information
Stay tuned to AgWeb.com for pre-analysis of the April 9 reports, as well as full coverage after their 11 a.m. release.
See current market prices in AgWeb's Market Center.