'Worst Case' Scenario as USDA Boosts Production, Drops Demand

November 10, 2015 03:20 PM
 
'Worst Case' Scenario as USDA Boosts Production, Drops Demand

Tuesday proved an ugly day for grain and livestock markets, according to Jerry Gulke of the Gulke Group, thanks to a bearish USDA report that shoved prices downward.

“This was a whammy we didn’t want to see,” said Gulke, in a special Farm Journal Radio report after USDA boosted production for corn and lowered demand. “This was one of the worst case scenarios that we saw coming, where you raise production and you don’t find a corresponding increase in demand to eat up that production” and reduce the carryover.

Listen to his full comments here:

Wheat, soybeans, and cattle also took a hit on Tuesday.

“Rarely in my lifetime have I seen the livestock sector and the grains sector get hammered by demand questions or production oversupply and that type of thing, and we’re in there now, which does not bode well in the long term for farmland prices, farm rents, and machinery dealers,” said Gulke. “We’re going to have some interesting times here. All that, and the bottom line, says we need a crop problem somewhere.”

But it might need to be a big crop problem for prices to recove, given the size of the U.S. carryovers for corn and soybeans.

“People will want me to speculate—‘how low do you think prices can go?’” Gulke said. “In a situation like this, it’s now how far they’re going to go lower that I can quantify, it’s where they are not going to go. There’s no reason in this crop report (to expect) to see corn prices, soybean or wheat get higher than they’ve been this month … We need a sound fundamental whack at total supply somewhere.”


Back to news


RELATED CONTENT

Comments

 
Spell Check

Cowbuoy
Crockett, TX
11/11/2015 06:40 AM
 

  I thought that soybean and grain production in Brazil was taking a big hit? Has this been taken into account already?

 
 

Corn College TV Education Series

2014_Team_Shot_with_Logo

Get nearly 8 hours of educational video with Farm Journal's top agronomists. Produced in the field and neatly organized by topic, from spring prep to post-harvest. Order now!

Markets

Market Data provided by QTInfo.com
Brought to you by Beyer
Close