With the April WASDE report in the books, Jerry Gulke is keeping a close eye on demand, particularly for corn and summer forecasts.
“There was nothing (in Tuesday’s report) that was really good news,” said Gulke, president of the Gulke Group in Chicago, speaking on Farm Journal Radio. “There was nothing that was really bad news—except for corn,” which posted a higher than expected ending stocks estimate of 1.862 billion bushels, according to USDA on a reduction in feed usage of 50 million bushels and an increase in ethanol production using 25 million bushels more. “You’d like to see the total demand go up so you wouldn’t have to raise carryout,” Gulke added.
Unfortunately, May has often been a month where the USDA infers a plateau in usage. So a weak month for demand would be troubling given the 93.6 million acres of corn that U.S. farmers say they’ll plant this spring, which could translate into a considerable increase in corn carryover.
The wild card, as always? Weather, both during the planting and growing seasons. “If we get off to a good start, there’s no reason for USDA to use anything other than average trendline yields for everything,” said Gulke, which could lead to even greater ending stocks for the 2016/17 marketing year.
Gulke was already looking ahead and bracing for a corn carryover of 2.4 billion bushels or more based on his estimate of 94.0 million acres of corn.
“It all depends on the final yield of course. What the government uses as an estimated yield in May will be important in the short-run,” he said. “Weather is getting a lot of press lately as more and more forecasters are joining the view of a hot and dry summer, but it is too early yet and we don’t know when such a forecast will develop, if indeed it does.”
Today's higher close in corn could be the first indication that summer weather is precedence over good planting weather ahead, he added.
Listen to Gulke’s full comments here, including his thoughts on whether farmers might switch from planting corn to soybeans this spring.