Corn and soybean prices sank lower this week. September corn prices were down 29.5¢, and December corn prices were down 35.75¢, for the week ending Aug. 20. September soybean prices were down 77.25¢, and November soybean prices were down 72.50¢. December wheat prices were down 45¢.
Why did prices take such a hit? Several factors played in, says Jerry Gulke, president of the Gulke Group.
“A lot of what had to do with some of the evolving eco-political events across the globe,” Gulke says. “One, which we’ve talked about a lot, is the suspicion the demand out China may not be as good as we thought back in January.”
In mid-May, most of the grain commodities posted some key tops for the year—thus far.
“With each USDA report since, even when numbers are fairly friendly, we’ve been going down,” he says. “Now you add in a political situation with Afghanistan. I sound like a broken record but technically the market told us some time ago to be concerned, we just didn’t know what it was yet. I saw it on my crop tours and Pro Farmer concluded it—our crop production(s) may not equal supply deficiencies as first thought.”
The 2021 Pro Farmer Midwest Crop Tour ran from Aug. 16-19. Scouts sampled corn and soybean fields in Iowa, Illinois, Indiana, Nebraska, Minnesota, Ohio and South Dakota. Read full coverage of the Tour.
Following the Tour, Pro Farmer released its national crop estimates based on Tour data, crop maturity, acreage adjustments, historical differences and areas outside those sampled on the Tour.
For 2021, Pro Farmer’s national crop estimates are:
- Corn: 15.116 billion bu.; Average yield of 177 bu. per acre
- Corn +/- 1% = 15.267 billion bu. to 14.965 billion bu.; 178.8 bu. to 175.2 per acre
- Soybeans: 4.436 billion bu.; Average yield of 51.2 bu. per acre
- Soybeans +/- 2% = 4.525 billion bu. to 4.347 billion bu.; 52.2 bu. to 50.2 bu. per acre
The increase in harvested acres estimate by Pro Farmer added to bushels, Gulke notes. He says the Crop Tour reports and Pro Farmer estimates aligned with what he’s seen on his various tours around the Midwest this year.
“They did verify what I think everybody knew that the crop in eastern Corn Belt is good,” he says. “We thought the crop in Illinois might be a record, which remains to be seen. The crop in Iowa was better than most thought.”
Gulke says while he was not surprised by the Crop Tour numbers the market was, based on prices this week.
“But I think in the background there is more to it,” he says.
Gulke says China demand, the ongoing COVID-19 pandemic and overall global demand continue to influence market prices.
“There’s a lot of uncertainty out there in the background,” he says. “The one certain thing is we don’t know how big that crop really is, but we know it isn’t a disaster.”
How to Find More Insights
You have listened to and read Jerry Gulke’s fundamental and technical analysis since the start of the bull market to the tops made in May 2021 followed by the generally lower trend to date. The next three months may greatly influence not only the current marketing year’s prices but next year’s as well. To help you navigate the volatile markets, Jerry is offering a special three-month opportunity for his Gulke Group cash and hedging advice. For more information call 707-365-0601 or email Jerry at Jerry@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. 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.
