December corn prices were down nearly 23¢ for the week ending Nov. 11. January soybean prices were up down 12¢. December wheat prices were down 34¢
Three big factors impacted the grain markets this week:
Factor 1: November USDA Reports
Small crops are no longer getting smaller. In its November round of crop reports, USDA increased both the national corn and soybean yield by 0.4 bu.
For corn, USDA raised its yield estimate to 172.3 bu. per acre and left harvested area at 80.844 million acres. Total production is at 13.93 billion bushels. That compares to 15.074 billion bushels in 2021.
For soybeans, USDA raised its yield estimate to 50.2 bu. per acre. It left harvested area at 86.631 million acres. Total production is at 4.346 billion bushels, which compares to 4.465 billion bushels in 2021.
“There was nothing bullish or extremely negative in the reports,” says Jerry Gulke, president of Gulke Group. “I think the surprise for everyone out there was USDA didn’t address how far behind we are in corn exports.”
This is the time the U.S. should be selling corn, Gulke says, but some customers are looking for alternatives since U.S. corn has stayed relatively expensive through harvest.
“So, I was quite surprised that they didn’t lower the actual corn exports, but maybe that’s coming down the road,” he says.
Factor 2: Mid-Term Elections
“The pollsters missed this election,” Gulke says. “My only concern going in an election was there just so many people leaning one way like it was a slam dunk that the Republicans would do a sweep, and it didn’t happen.”
For agriculture, he says, it seems like mostly good news: “It seems kind of like we are in a hung jury, where not a lot will happen either way.
Factor 3: U.S. Dollar Heads South
As of Friday, the U.S. dollar was down about 3.8% over two sessions, on pace for its largest two-day percentage loss since March 2009.
“I imagine we’ll get a bounce in the dollar, whether it’s a dead cat bounce or not, I don’t know,” he says. “But it collapsed. I think if you look in the dictionary now and define the word collapse, you’ll see a picture of the collapsing dollar in there, it’s just straight down.”
Bitcoin also crashed this week.
“This is a monumental event that I’ve never seen in my lifetime — for something to drop that quick,” Gulke says. “We’ve seen collapses in grain prices but for obvious fundamental reasons. But there’s something hiding in the background here that which we don’t know about yet.”
The only upside, Gulke says, is it made U.S. exports cheaper.
Read Jerry’s latest column in Top Producer: Jerry Gulke: Are We Seeing Grain Demand Destruction?
If you’d like in-depth analysis from Gulke, contact him at info@gulkegroup.com
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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.
