New demand for U.S. corn and soybeans is needed to rebound prices.
The latest round of USDA Crop Production and World Agricultural Supply and Demand Estimates held no signals of support for the grain markets.
The national average corn yield was pegged at 146.7 bu./acre, down 1.4 bu. from October.
Jerry Gulke, president of the Gulke Group, says lowering the yields for both corn and soybeans was a surprising move. “I kind of thought they’d raise them.”
The corn crop estimate from USDA came in 123 million bu. below the October report, while the soybean crop estimate came in 14 million bu. under its October mark.
Additionally, USDA lowered its corn ending stocks projection by 23 million bu. from last month and raised its soybean carryover projection by 35 million bu. from October.
Gulke says even though USDA lowered production, they didn’t drastically lower ending stocks. All of these mixed signals left the market flat.
“When it was all said and done, the market looked at the report and any type of gain we had fizzled. We closed lower for the week and actually turned things kind of negative on a technical basis.”
Demand Takes a Hit, but Needs a Kick
Gulke says we didn’t get as bullish of a report as we expected and in turn are lowering demand.
“We found a lot more corn and wheat being raised in other countries. I think the inherent thing that you take away from that is that if you get the prices higher, we’re going to produce more.”
Now, he says, the bottom line is we need new demand for corn and soybeans. But, he doesn’t expect to see any major buyers for December corn until it hits $6 region again.
MF Global Debacle Continues
Gulke says as more news become available the market implications surrounding MF Global continue to emerge.
“That has sucked a lot of money out of the market,” he says. “When the money isn’t moving, we’re not seeing the huge price swings we’ve had before. It’s going to change a lot of things.”
For More Information
See this week's market summary report: Unexplained Weakness in New Crop Corn
Visit AgWeb's Market Center.
Listen to more AgWeb Radio.