Jerry Gulke: Grain Markets Overcome Outside Uncertainty

December corn prices were down 0.75¢, for the week ending Sept. 21. March corn prices were down 0.5¢. November soybean prices were up 1.25¢, and January soybean prices were up 2¢. December wheat prices were up 14.5¢.

“In spite of some global economic headwinds and an open harvest week, the grain markets seem unphased,” says Jerry Gulke, president of the Gulke Group.

So far the lows posted from the last USDA report (Sept. 10) have held with the trading ranges for September, he says. Those ranges are roughly 50¢ in November soybeans, 40¢ in December corn, and 42¢ in December Chicago wheat.

Here are the fundamentals influencing the markets that Gulke is watching:

• U.S. weather is dry for the next week, allowing for good harvest progress in the West, as the East dries out.
  
• Export demand for corn is slow (12 million bushels based on the latest sales report). But the sales on the books are good.
  

• The wheat market continues strong as China procured more French wheat, but had to revert to buying from Australia due to quality issues with French wheat. Russian values are strong, and the market is bracing for an eventual government intervention to limit exports, but that may take time.
  

• The Small Grains Report and Grain Stocks numbers on Sept. 30 could be a big deal for the wheat market. If the Sept. 30 USDA report has a surprise, Gulke says it may well be in wheat. The Grain Stocks report could be friendly corn, as strong basis likely emptied on-farm bins, however the Hogs Report implies less corn will be eaten by hogs this fall and may affect past usage. The hogs report could be a negative for corn.
  

• China’s issue with power is reported to be slowing down some crushing plants. China has excess capacity, so total crush may not be impacted that severely. The soybean export sales have been OK but we need to see it improve as the export window for U.S. soybeans is not that wide.