Jerry Gulke: Is NASS Back to Influencing Market Prices?
The grain markets changed trend this week, thanks to a big round of USDA reports.
September corn prices were up 26¢, and December corn prices were up 34¢, for the week ending July 16. August soybean prices were up 75.25¢, while November soybean prices were up 59.75¢. September wheat prices were up 78¢
USDA released its monthly Crop Production and World Agricultural Supply and Demand Estimates (WASDE) reports.
“As expected, they didn't change the soybean situation much at all, which was fine,” says Jerry Gulke, president of the Gulke Group. “The big surprise to the market was in wheat.”
USDA cut to all-wheat production this year by dropping the national average yield by 4.9 bu. to 45.8 bu. per acre. As a result, the all-wheat production total is estimated to hit 152 million bushels less than June’s estimate. USDA says according to NASS, the biggest issues in wheat are coming from durum and other spring wheat classes, as drought plagues producers in the Northern Plains.
“They cut it even more than I anticipated,” Gulke says. “We’re going to have to import about 100 million bushels of spring wheat in order to have enough week of the high-quality blending wheat we use for quality pasta and bread in the United States. And I know a lot of millers out there were probably blindsided by this. They shouldn’t have been because it was pretty well reported in the crop ratings.”
Gulke says the last time wheat carryout was this tight was about 10 years ago. He was impressed NASS acknowledged this early how poor the wheat crop is in the U.S. “Historically that has not happened. They usually kick that can down the road.”
The increase in wheat prices, Gulke says, helped buoy corn prices.
“In general, we had a dynamic shift in the outlook for grains,” Gulke says. “Markets are going to go up or go down, but I think the trend has changed. The August report should be as dynamic as the report we had this week.”
In terms of weather, Gulke says the recent rains across the Midwest have bought some time for crop production.
“We still have about six weeks’ worth of weather yet that could really affect the soybean production and prices,” he says. “So, this thing isn’t over yet.”
Read More
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Wheat Production Worries Headline July WASDE Report, Carries Corn Prices Higher
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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.