May corn prices were up 17.25¢ and May soybean prices were up 0.5¢, for the week ending April 9. May wheat prices were up 28¢.
USDA’s April World Agricultural Supply and Demand Estimates (WASDE)
“In corn, they did lower the corn carryout, which would be our carryin next year, from 1.502 mil-lion bushels to 1.352 million bushels,” says Jerry Gulke, president of the Gulke Group. “USDA did that by adjusting ethanol usage up by 25 million bushels and feed/residual use up by 50 million bushels.”
Corn exports were increased 75 million bushels. The season-average farm price is unchanged at $4.30 per bushel.
“We are feeding a little more and burning more ethanol, which is good,” Gulke says. “So, we have less stocks, but we’re running out of time to run out of corn.”
In soybeans, USDA elected not to change the carryout, leaving them at 120 million bushels. The soybean outlook includes higher exports, lower crush, residual use and seed use. The season-average soybean price is forecast at $11.25 per bushel, up 10¢.
“The export program with China buying from us is probably gone now in favor of Brazil because Brazil is about 80% complete in harvest, so they are trying to ship beans as fast as they can,” Gulke says.
In wheat, USDA’s outlook includes lowered supplies, reduced domestic use, unchanged exports and higher ending stocks.
Gulke says the big takeaways from the report are from the global data shared by USDA.
USDA raised global soybean production by 1.4 million tons to 363.2 million, mainly reflecting a 2-million-ton increase to 136 million for Brazil. Favorable crop conditions in Brazil’s southern state of Rio Grande do Sul and updated harvest results from national and state agencies support higher yields.
Gulke says the markets were disappointed last week when USDA forecast only 87.6 million acres of soybeans in the U.S. this year.
“All of a sudden you find 2 million metric tons, which is about 75 million bushels,” Gulke says. “That makes up the difference for the lower soybean acres in the U.S. That was the negative part of the report that caused soybean prices to drop. We are probably slowly alleviating the need for more soybean acres in the U.S. Now we probably don’t want to find a few more million acres of U.S. soybean acres.”
General Economy Strength
The U.S. producer price index increased more than expected in March, resulting in the largest annual gain in 9.5 years. The producer price index for final demand jumped 1.0% last month after increasing 0.5% in February, the Labor Department said on Friday. In the 12 months through March, the PPI surged 4.2%.
“This is something we need to keep an eye one,” Gulke says. “We need to be aware of what is going on with the general economy.”
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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.
