Jerry Gulke: Did Prices Get Cheap Enough to Attract More Demand?
The markets reacted negatively to the Oct. 12 USDA reports. But prices regained some of their losses.
December corn prices were down 4.75¢, for the week ending Oct. 15. March corn prices were down 5.25¢. November soybean prices were down 25.25¢, and January soybean prices were down 28¢. December wheat prices were flat.
Highlights of the reports include:
- Corn production for grain is forecast at 15 billion bushels, up slightly from the previous forecast and up 6% from 2020. Yields are expected to average 176.5 bu. per harvested acre, up 0.2 bu. from the previous forecast and up 5.1 bu. from last year.
- Soybean production for beans is forecast at a record 4.45 billion bushels, up 2% from the previous forecast and up 5% from 2020. Yields are expected to average 51.5 bu. per harvested acre, up 0.9 bu. from the previous forecast and up 0.5 bu. from 2020.
“The markets were set up for a reduction in corn yield and they raised the yield,” says Jerry Gulke, president of the Gulke Group. “One of the surprises was they didn't lower ethanol use, and maybe they shouldn't yet because ethanol margins are pretty good right now. They also raised corn exports, which is interesting because we're behind in our export loading.”
Overall, the report weighed negatively on prices.
“We mentioned in the past how the grain markets topped in May, and they’ve been sliding lower ever since,” Gulke says. “The old saying is big crops get bigger and I think they will get a little bit bigger. The soybean crop may get another half a bushel or so bigger.”
The good news is the decrease in prices attracted more demand.
“It gave the buyers a gift to step up to the plate and cash in on lower prices,” Gulke says. “Now we got to a level where, all things being equal, the price of grain is looked at as pretty reasonable.
Listen in as Gulke dives into fertilizer prices, Chinese demand and more.
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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.
