Time to Watch Demand, Yield Estimates

April 12, 2016 02:30 PM
Time to Watch Demand, Yield Estimates

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. 

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Spell Check

three fortys
cokato, MN
4/12/2016 05:03 PM

  I still say the great amount of ending corn stocks is not as big as we are led to believe! In my area the corn is sold or spoken for, and i have to believe that might be true through out the country? fiqures are being used to control prices to a certain extent. WE need a 10% set a side program again or no usda at all and let the market it self set the price. to many games and to many people involved, can we keep supporting it all? But it is america

Greensburg, IN
4/12/2016 05:34 PM

  Find it interesting everyone ran to the other side of the boat on corn when the 3/31 numbers were release, but yet we have gained back all but 1 1/2 cents of that's days loss in what Mr. Gulke so proudly boasted he predicted. I smell something fishy. Perhaps the U.S. dollar weakness is slowly changing the speculators attitude towards shorting commodites? Maybe buying commodities is no longer tabu. Look at what the beans have done since 3/1? Explain that Mr. Gulke. Yes the U.S. dollar... Perception is reality.

vaughan, MS
4/13/2016 07:40 AM

  I really have concerns that Gulke knows what he is talking about. He is quoted here saying there would be no changes from the report. yet the market is steadily moving up. I understand nobody is right all the time, but his percentage has to be WAY down. If marketers have been following his suggestions since the first of the year I believe they will have made some bad moves. Re-evaluate your predictors Mr. Gulke!