The markets continue to exercise caution ahead of the fourth and final big USDA report this month. May corn prices were down 5¢ and May soybean prices were down 15.25¢, for the week ending March 26. May wheat prices were down 13¢.
“We’ve seen some narrowing in the trading ranges,” says Jerry Gulke, president of the Gulke Group. “It feels like there has been a lot going on, but corn and soybeans have not changed in price much the last few weeks. We’ve had lots of volatility, but we haven’t extended any strength or weakness of any significance.”
Wheat prices have broken their long-term uptrend, which is concerning, Gulke says.
Gulke has been watching the soybean oil market. From a long-term standpoint, he says, the fundamentals look supportive. One issue helping support prices is Goodyear Tire & Rubber Company has committed to using sustainably produced U.S. soybean oil and phasing out petroleum-derived oils from its products by 2040.
“That is good news for soybean oil and will likely incentivize more soybean acres in the future,” he says.
On Wednesday, March 31, USDA will release its Prospective Plantings and quarterly Grain Stocks report. This will be the fourth and final round of big USDA reports this month.
“I think the market kind of dismisses the acreage report,” Gulke says. “The mix of the numbers may be discounted pretty quickly, unless it’s really one sided for a specific crop.”
The average trade guess ahead of the report is 94 million acres of corn and 89 million acres of soybeans.
“The kicker will be what is the total acres going to be? Will we approach a record amount of row crop acres this year? We could do that,” Gulke says. “We could plant fencerow to fencerow.”
In the Grain Stocks report, Gulke says he’ll be watching to see if the data shows the 2020 crop was bigger or smaller than current expectations, and how much of it has been used.
“That’s the one area that we could get blindsided by,” Gulke says. “These reports will be big ones.”
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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.
