Once again, prices drifted lower this week.
December corn prices were down 30.5¢, for the week ending Sept. 3. March corn prices were down 27.75¢. November soybean prices were down 32.25¢, and January soybean prices were down 27.25¢. December wheat prices were down 5.75¢.
“This market looks like it could be in trouble,” says Jerry Gulke, president of the Gulke Group. “Now we’re significantly off the highs of the year, and it may be turning more negative depending upon what the report says next week.”
Hurricane Ida’s impact on agriculture and the supply chain continues to unfold this week. Two key grain elevators along the Gulf took a direct hit from the hurricane, but that’s only part of the problem. Barges are also on the loose, crashing into one another and piling up. And power outages are expected to last nearly a month.
“What we keep hearing is that our ability to export grains has been compromised,” Gulke says. “It may not be as bad as it sounds; we’ll know no more next week. But it certainly looks like it’s bad enough that China has been diverting loads from the Gulf to the Pacific Northwest.”
So far basis hasn’t been impacted in my area but I hear they have fallen elsewhere, Gulke says, but the uncertainty is causing global market changes.
“If we get people buyers going to other sources, then we may lose that business completely,” he says. “In fact, we’ve heard that China is booking soybeans for October delivery from South America. We do not want to lose business to Brazil and Argentina. That really upset the apple cart and makes for interesting decisions from USDA for their supply and demand forecasts.”
This week USDA’s National Agricultural Statistics Service (NASS) announced it review all available data, including survey data, satellite-based data, and the latest information from USDA’s Farm Service Agency and Risk Management Agency, for planted and harvested acreage for corn, cotton, peanuts, rice, sorghum, soybeans, and sugarbeets in preparation for the September Crop Production report. If the data review justifies any changes, NASS will publish updated planted and harvested acreage estimates in the Sept. 10 report.
“I heard a news report where USDA said their data came in much faster than normal, so they decided to deliver it to the people sooner to help them make better decisions,” Gulke says. “There’s always been the caveat that they could do this sort of revisions, so the first implication is there must be something significant or they would have just waited until October.”
Gulke says most people are thinking USDA finally found those missing 3 million to 4 million acres.
“You just don’t want to suddenly see USDA come in and say we now have 500,000 to even 2 million more corn acres,” he says. “Remember, each million acres of corn is about 180 more million bushels of corn—that tips the scales pretty good. Same for soybeans.”
Gulke expects the Sept. 10 reports to be a market mover.
“They could keep the yield lower and increase acres and not make things look so bad,” he says “Or they can increase acres and increase yield both, and then we really have a problem. I think there’s a reason to believe that the yield is going to be better than what they predicted a couple of months ago, more in line with what Pro Farmer found.”
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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.
