Overall grain prices drifted lower this week. December corn prices were down 11¢, for the week ending Oct. 8. March corn prices were down 10.25¢. November soybean prices were down 3.5¢, and January soybean prices were down 2.5¢. December wheat prices were down 21.5¢.
On Tuesday, Oct. 12, USDA will release its monthly Crop Production and World Agricultural Supply and Demand Estimates. Jamie Wasemiller, market analyst with Gulke Group, will be watching several factors in that round of report.
“As many of us already know, on Sept. 30, USDA did their year-end analysis of corn and soybeans and found 80.8 million more bushels of soybeans, which will go directly into next week’s supply-and-demand tables,” he says. “That move alone changes the ending stock carryout from 184 million to 256 million bushels, which changes the stocks to use ratio from 4.2% to 6%.”
If USDA raises the current yield estimate up 0.5 bu. to 51.1 bu. per acre, Wasemiller says, ending stocks go above 300 million bushels. “USDA is certainly justified in lowering exports whether it happens next week or sometime in the next few months we are looking at ending stocks closer to that 400 million range,” he says.
Historically that level of ending stocks suggest futures prices ranging from mid-$9 to sub $11, Wasemiller says.
In corn, USDA lowered old crop production by 71 million bushels. Wasemiller will be watching how USDA adjusts the national average yield.
“The jury might still be out regarding this year’s national yield, due to tar spot disease in Illinois, Wisconsin, Michigan and others,” he says. “Unless we see a surprise, the corn ending stock appear like they will stay relatively stable with previous reports.”
From a global standpoint, CONAB released its Brazilian estimates for 2021-22, which are the crops currently planted or soon-to-be planted.
“They are projecting the country’s second-crop corn to come in at 86 million metric tonnes (MMT), which is just below Brazil’s entire corn production for 2020-21,” Wasemiller says. “Overall, they are expecting to grow 116 MMT vs 87 MMT the previous year. They are also projecting a very strong corn export program in 2021-22.”
Crop Insurance Update
We are in the discovery period for harvest prices in corn and soybeans. Wasemiller provides these crop insurance harvest price updates:
- Corn harvest price is at $5.37 versus the spring price of $4.58. The harvest price average has gone down 5¢ since Oct. 1.
- Soybean harvest price is at $12.44 vs the spring price of $11.87. The harvest price average has gone down 3¢ since Oct. 1.
“Normally I would give some insurance strategy but with the yields that have been coming in so far I do not think there is much to do as far as trying to lock in these prices if the harvest price continues to fall throughout the month of October,” he says. “I supposed if you happen to be a producer that is going to have yields come in well below their APH you might consider buying some puts or what I prefer would be to sell calls to mitigate any insurance losses but unless the market has a huge move lower based on next week’s USDA report I might just ride this one out.”
Listen in as Wasemiller also discusses fertilizer prices, Chinese crop production and more.
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.
