It was a slow news week for the grain markets with mostly technical trading dominating price action as corn and soybean harvest reached the halfway point, according to Jerry Gulke, president of The Gulke Group, speaking on Farm Journal Radio's Weekend Market Report.
Corn and soybean harvest continued to push ahead this week with virtually no weather disruptions as more dry weather dominated the Midwest. In USDA’s latest Crop Progress report, corn harvest for the week ending Oct. 11 was reported at 42% complete while soybean harvest was 62% complete.
However, better-than-expected soybean yields that are well above farm averages are pressuring the cash market while basis continued to firm for corn amidst more variable reports on harvest yields.
“They’re not just 5 bushels above. They’re 10 bushels, 15 bushels above their APH in beans, and maybe 20 in corn or more in Iowa,” Gulke said of farmers' yield reports from the fields.
The higher-than-expected yields, he added, would likely cause USDA to increase the yield estimate in future Crop Production reports.
“There’s no disagreement with the fact that bean yields could jump…another half bushel or something,” Gulke noted.
Listen to Jerry Gulke's full comments here:
In USDA’s October Crop Production report, the average U.S. soybean yield was forecast at 47.2 bu./acre.
The bigger soybean and corn crops are bringing downward pressure on prices, but the harvest selling isn’t equal across the Corn Belt, Gulke said, noting that basis levels have been stronger in the eastern Midwest.
“A lot of guys are saying, 'well, I’ve got a big bean crop out here and a lot of corn. Maybe I’ll just sell it.' So I think that’s the debate out there. There’s not enough of that going on right now that has caused the basis east of the Mississippi to deteriorate. In fact it’s narrowed in my area a little bit, and I think we’ve seen the widest basis east of the Mississippi that we’re going to get. That may also be coming true in the west because the guys in the east .. are paying up for this corn. They just don’t have it, and the farmers who had two-thirds of a crop in the eastern Corn Belt ... are just putting it in the bin and just sitting on it. We’ll see how long farmers can hold and how tight the basis can get."
The strengthening basis will create marketing opportunities down the road.
“I think we’re in the driver’s seat,” Gulke said. “Once we get this harvest 75 percent to 80 percent done, then it’s pretty hard to get the guys to open the bin doors and sell the excess.”