With Pro Farmer confirming a record soybean crop and just under a 15-billion-bushel corn crop, what is the harvest and post-harvest outlook?
Jerry Gulke, president of The Gulke Group, says weather will now be in focus and important to help the crop finish.
Right now, the weather looks conducive for getting the crop to maturity and a favorable grain fill period, yet Gulke isn’t ruling out a few problems with immature crop in the northwest Corn Belt that could be susceptible to even a normal frost date.
“We’re going to need a lot of time to let this crop evolve and finish out. The longer it takes to finish, the better the chances the test weight improves. However, if you shorten the maturity through cooler days, then maybe we trim a bushel off and that would help the carryout,” he explains.
Gulke says if USDA keeps corn around a 181 bu. yield that could pull carryout below 2 billion, which would help.
With variable corn and soybean maturity, he also thinks harvest will be a drawn-out affair, which might take some hedge pressure off the market as it will spread out marketing.
However, Gulke thinks a large soybean crop is in the field based on his own farm and what he’s hearing from clients.
“Some of them tell me their soybeans are the best they’ve ever had. There’s a lot of pods, and a lot of three-bean pods. We got the August rains, so it points toward record yields,” he adds.
When Gulke does the math on the increase in soybean ending stocks tied to the higher production estimate from Pro Farmer, he thinks carryout could swell to 750 to 760 million bushels.
“That is a bearish scenario for the soybean market. Plus, early projections are for Brazilian farmers to grow a record 169-million-metric-ton crop in the coming market year. That’s up 380 million bushels more than last year,” he says.
From a marketing standpoint, Gulke says there is carry in the futures market that farmers are going to want to capture again this year.
“I see some people who can manage selling or hedging off the carry in the July for corn for the 30 or 40 cents carry and 70 cents, or whatever it is, in beans, and then also selling calls for the premium and thinking outside the box when it comes to taking a risk,” he explains.
However, farmers might have extra bushels they did not expect or have hedged due to the higher yields.
With soybeans, Gulke says: “I think what I’m going to do is if I’m 60% sold, or actually we’re 100% sold on beans, I might just lift those hedges at the time I harvest. If they’re still going down, maybe I will sell the cash and ride the futures for another dime. However, I’ll do a real hedge.”
That means Gulke will take his paper profits after lifting his hedges, put them toward his cash sales and offset them.
For corn, Gulke has forward priced around 70% of the new crop.
However, they have 20% to 30% of the crop unpriced, so they are looking for better marketing opportunities for on the open market, meaning it will not be covered by futures or hedges.
For more information, contact Jerry at info@gulkegroup.com.
