As the saying goes, a bear only needs to eat once a year and the bull needs to eat every day. This week, grain prices drifted lower.
May corn prices were down 6.5¢ and May soybean prices were down 16.25¢, for the week ending March 12. May wheat prices were down 14.25¢.
At play this week was USDA’s monthly crop Production and World Agricultural Supply and Demand Estimates (WASDE) reports.
“The U.S. supply-and-demand tables were relatively unchanged,” says Jerry Gulke, president of the Gulke Group. “I don’t think anybody expected much, but still we were down for the week and we’re down as a result of that report.”
The biggest information out of the report was South American production data, Gulke says.
“They raised the crop in Brazil by 1 million metric tons — catching up with the private guys,” he says. “They’re still not where we think they should be; we think it’ll be higher to much higher than what it is now.”
In the executive report, USDA reported the Safrina corn crop in Brazil is going to be very large, Gulke says. This is in spite of the late planting and of the wet conditions — it will get planted.
“As we sometimes say, ‘Price is a great fertilizer,’” Gulke says. “So those crops are going to be higher maybe at a record level, in spite of the weather, harvest delays and late planting. It also implies the bean crop is going to be larger.”
A commodity that wasn’t down this week was soybean oil. Gulke says those prices are being supported by a new formulation of biodiesel being supported in California.
“This biodiesel demand is significant,” he says. “When you look at a soybean oil chart, it is straight up. Well, in order to be able to get enough biodiesel to meet demand, you’ve got to crush soybeans. This could make an interesting issue down the road for how many acres of soybeans we plant versus corn.”
This month still has several key USDA reports farmers should watch, Gulke says. Those include:
- Hogs and Pigs, March 25
- Grain Stocks, March 31
- Prospective Plantings, March 31
Technically Speaking by Jerry Gulke
Price action can preclude problems with demand. Is the explosive price in hogs telling us that while domestic demand is on fire, that there is more to it than that---i.e. disease problems in China re-emerging as well as problems with PRRS in the U.S.?
The corn market looks concerning at best and toppy at worse. It falls in line with questions on hogs above. Is domestic demand going to falter or has that demand reduction already started?
How the markets react to the next three USDA Reports will tell the story.
Read More
Jerry Gulke: Price Volatility Spreads to All Markets
Jerry Gulke: A Lifetime of Experiences in One Year
Jerry Gulke: USDA’s Supply-And-Demand Dilemma
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Jerry Gulke farms in Illinois and North Dakota. He is president of Gulke Group. Disclaimer: There is substantial risk of loss in trading futures or options, and each investor and trader must consider whether this is a suitable investment. There is no guarantee the advice we give will result in profitable trades. Past performance is not indicative of future results.
