The Pro Farmer Crop Tour held the market’s attention this week, sending prices higher. Corn prices were up around 40¢ for the week ending Aug. 26, while September soybean prices were up $1.20 and November soybean prices up 57¢. Wheat prices were up 20¢ to 40¢.
Pro Farmer Crop Estimates
Following the 30th annual Pro Farmer Crop Tour, Pro Farmer estimates the 2022 U.S. corn crop at 13.759 billion bushels based on an average yield of 168.1 bushels per acre. That estimate is down sharply from USDA’s August estimate of 175.4 bushels per acre.
For soybeans, Pro Farmer estimates the 2022 U.S. soybean crop at 4.535 billion bushels with a national average yield of 51.7 bushels per acre, down from the 51.9 bushels per acre USDA estimated Aug.12.
The estimates are informed by Crop Tour data and observations collected this week through an exceptional effort by Crop Tour scouts in thousands of fields across seven key Midwestern states. Read More: Pro Farmer Crop Estimates Far Below USDA Expectations
“Over the last three years or so we have seen the Pro Farmer Crop Tour’s number come in relatively close to USDA’s final numbers so this year’s numbers certainly add more intrigue into what the USDA is going to come up with in a few weeks,” says Jamie Wasemiller, market analyst for Gulke Group. “USDA should have boots on the ground very soon so they may see some minor benefits in regards to grain fill and test weight and of course they will also get more insight into areas of the states that were not seen by the Pro Farmer Crop Tour.”
Wasemiller says Gulke Group currently has a range of 171 bu. to 172 bu. for the national average corn yield. For soybeans, they are estimating 52 bu. per acre.
“If USDA sees what Pro Farmer does we really need to watch how they approach demand moving forward and our next opportunity to see that is Sept. 12,” he says. “Keep in mind that demand can be a moving target for the USDA and that is price driven.”
Technically Speaking by Jerry Gulke
The anatomy of the corn and soybean markets, including pitfalls, headwinds and political risk associated with managing price risk, have been pretty well covered in our weekly radio program and occasional charts. This will likely be the last “price-picture” update until post-harvest.
The point graphically pointed out in the charts below is the benefit of flexibility in volatile markets like we’ve seen and that will likely continue both in up and down moves in prices. The potential benefits of having flexibility to pass off risk (lock in prices) and to accept risk (unsold) is obvious if one has the expertise, market savvy and rational outlook recognizing when something is underpriced or overpriced.
It was obvious both corn and soybeans had difficulty exceeding and staying above early spring highs. For soybeans that point was the onset of the war in Ukraine. For corn it was in mid-April when the rally that started Jan. 7, enticing the planting of corn was complete about the time planters when into the field. If price wasn’t high enough then, any further significant increase would be a moot point in enticing any more acres.
Corn subsequently retreated back to Jan. 7 levels (the start to the bull market). In other words, all the gains were lost and by July 6 prices reached a level below which it made no sense to be hedged (futures) and only cash sales in the $6.50-to-$7.25 area made sense. If risk was lifted (profits taken on hedges) corn has rallied nearly $1 per bushel sense resulting in adding another $1 to the selling price of those bushels managed thusly and properly. A new decision is at hand.
Soybeans were similar failing June 10 (report day) to exceed the Feb. 24 “war” date and collapsing thereafter to take back ALL the 2022 gains to a point of where it didn’t make sense to be hedged (sold) at the beginning of the most important yield weather months lying ahead.
Like corn, soybeans gained $1 per bushel and offering another decision-making opportunity.
Chicago wheat topped May 15, one month earlier than corn. Often as wheat goes, eventually it can be a precursor to corn action and so it was. Wheat lost ALL its war premium and was the grain that had the most to gain from the war. The lead trading month during 2022 could not exceed the 2008 high and subsequently collapsed even to December 2021 area; there was history behind what happens at lofty prices war or no war. Wheat has thus traded sideways. The question then is whether this is a pause that refreshes, or a distribution before another leg lower.
Hopefully you were able to manage the volatility profitably and further understand the process of price discovery through columns like this and most importantly are not in harm’s way in excessive cash sales in drought affected areas. Crop insurance helps but every time an insurance agent knocked on my door it was because I suffered a loss that insurance doesn’t cover completely.
If you are not pleased with your marketing experience thus far in 2022 and/or have questions regarding the rest of this year and ahead, we offer 30-day refund if not pleased with our daily advisory and phone alert. While weekly reviews are often sufficient during normal times, these are not normal times. Perhaps we can help whether grains, oilseed, meats or cotton. Phone Jamie at 707-365-0601 or contact us at info@gulkegroup.com.
Have a safe harvest,
Jerry Gulke
Check the latest market prices in AgWeb’s Commodity Markets Center.
Jerry Gulke farms in Illinois and North Dakota. He is president of Gulke Group Advisory Services. 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.
