Informa’s higher corn and soybean yield projections released this week and a continued rally in the dollar weighed heavily on ag markets this week, said Jerry Gulke on Farm Journal Radio's Weekend Market Report.
“They raised the corn yield almost to 171 (bu./acre), almost identical to last year," said Gulke, president of the Gulke Group in Chicago, speaking with Farm Journal Radio's Pam Fretwell. “That’s a pretty healthy increase. I think that’s two and a half bushel increase. And, they raised soybeans a little bit.”
The increase in Informa’s yield projections hints that USDA could follow suit and also raise their yield estimate in next Tuesday’s monthly Crop Production report, according to Gulke.
In the October Crop Production report, USDA raised their corn yield projection by 0.5 bu./acre to 168 bu./acre, while the soybean yield was nudged higher by 0.1 bu./acre to 47.2 bu./acre.
Further increases in yield would not bode well for farmers hoping for a post-harvest price recovery since corn and soybean prices already are struggling to hold on to rallies, Gulke said.
“Everybody’s thinking, ‘I’m going to hold that grain for the post-harvest rally,’ and we just haven’t seen it yet,” Gulke said. “If Informa’s numbers are agreed to by USDA next week, somebody’s going to say we could drift lower right into the end of December, and that’s not going to set well with producers.”
Listen to his full comments here:
Unfortunately, the dollar painted an even darker picture for ag commodity markets this week. With help from Friday's jobs report showing that unemployment rate dropped to 5.0% inn October, the dollar index rallied to 99.163--the highest level since mid-April. The stronger dollar makes U.S. ag exports even more expensive on the world export market.
The only bright spot, Gulke added, was the wheat market, which is being supported by production concerns in the Black Sea region and Australia.
“You don’t want to get too negative, but in reality we have a good crop--a big crop. South America has a decent crop, and that’s affecting corn and soybeans,” he said. “And, the high dollar means we’re less competitive (and) they’re more competitive.”
December corn futures ended the week 9¼ cents lower at $3.73/bu., January soybeans finished the week 18½ cents lower at 8.67¼, and Chicago December wheat rallied 1¼ cents to end the week at $5.23¼.