Markets move three ways: up, down or sideways. For the last five weeks, corn prices have essentially been trading sideways, while soybeans were in a downtrend.
Yet, this week marked two straight weeks of higher prices for corn and soybeans. December corn prices were up a little nearing 8¢ and November soybeans up nearly 18¢ for the week ending Oct. 14., Chicago wheat prices were down 18¢.
Are we on the verge of a new price trend? Jerry Gulke, president of Gulke Group, weighs in. Listen in as he discusses the Oct. 12 USDA reports and wild stock market action:
The big market influence this week was the Oct. 12 reports by USDA. In the Crop Production report, USDA dropped the national average corn yield by 0.6 bu. to 171.9 bu. per acre. In soybeans, USDA cut the national average yield by 0.7 bu., forecasting it to be 49.8 bu. per acre this year.
On the demand side, USDA lowered exports by 125 million bushels and lowered ethanol use by 50 million bushels. However, USDA increased feed and residual use by 50 million bushels. With supply falling more than use, corn ending stocks for 2022/23 are cut 47 million bushels.
“It was kind of a neutral report in corn,” Gulke says.
For soybeans, the lower production estimate was partly offset by higher beginning stocks. That resulted in a supply reduction of 31 million bushels. With lower exports partly offset by increased crush, ending stocks are unchanged from last month at 200 million bushels.
“So, in both corn and beans, we’re not keeping up with the projections for the exports,” Gulke says. “Even though China and others have come in during the last few days and bought significant amounts of soybeans.”
The bottom line, Gulke says, is as production goes down USDA is continuing to lower the usage as well — especially exports for both corn and soybeans.
Dynamic Price Action
Even though corn prices topped $7 this week and soybeans topped $14, they failed to close above those levels.
“Although we exceeded those levels, we couldn’t hold them,” Gulke says. “But we didn’t totally collapse — that’s the good news. We really need to see those areas cleared to sustain a move and then stay above those levels to say we’ll see high prices right into the next quarter and so forth. But it doesn’t look like given the report that we’ve got a major downside until we get into the first part of the year and see more about the war and South America production.”
If you’d like in-depth analysis from Gulke, contact him at info@gulkegroup.com
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.
