In its July 12 World Agricultural Supply and Demand Estimates, USDA pegs the 2017/18 corn production at 14,255 million bushels. This is based on increased planted and harvested areas from the June 30 Acreage report, the agency reports. The national average corn yield is unchanged at 170.7 bu. per acre.
Due to the large carryout, USDA lowered the season-average corn price 10 cents at the midpoint for a range of $2.90 to $3.70 per bushel.
“The report delivered a negative blow for corn, since they increased carryover,” says Jerry Gulke, president of the Gulke Group. “They didn’t do anything with the yield, and that leaves room to reduce the yield and still not have a problem with carryover.”
If USDA drops the national average corn yield by even just 2 bushels, Gulke says, that will wipe away the increase in corn stocks the agency forecasted today.
“We need a crop problem to continue corn market higher in the short-run,” he says.
Conversely, soybean demand seems to be strong, Gulke notes.
“Soybeans have been the wonder for the last three or four years,” he says. “The market consistently underestimates demand.”
Soybean production is projected at 4,260 million bushels, up 5 million on increased harvested area. The soybean yield forecast is unchanged at 48.0 bushels per acre. Despite slightly higher production, 2017/18 soybean supplies are reduced 35 million bushels on lower beginning stocks. Additionally, the U.S. season-average soybean price is forecast at $8.40 to $10.40 per bushel, up $0.10 at the midpoint.
“We lowered our carryover, despite of South America’s big crop,” Gulke says.
The soybean market is the best positioned fundamentally for prices to move higher, Gulke says.
“All in all, probably good news in the long-term for soybeans,” he says. “Any kind of crop problem at all and we’ll come roaring right back.”
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