From planting delays to governmental influence, the grain markets are being impacted by a plethora of factors.
July corn prices were up 24¢ and December corn prices were up 27¢, for the week ending April 29. July soybean prices were down 2¢ and November soybean prices were up 10¢. All classes of wheat were lower from 20¢ to 35¢. Hog prices and cattle prices both down for the week.
Jerry Gulke, president of the Gulke Group, says actions from governments in the U.S. and abroad are weighing on the markets. A few of the factors at play include:
- Concerns over the world’s supplies of grains and oilseeds are prompting the Biden administration to step in and encourage more U.S. production. The proposal includes dramatic boosts in commodity loan rates for select crops, including soybeans ($8.68 vs. current $6.20) and wheat ($5.52 vs. $3.38). Loan rates would also be increased 21% for both rice and pulses. It would also pay a $10-an-acre crop insurance subsidy that would be paid to farmers who double-crop soybeans and wheat. The proposal would need congressional approval. Read More: White House Asks Congress to Significantly Boost Some Commodity Loan Rates for Two Years
- The German government is working to restrict the use of crop-based biofuels due to supply issues and soaring prices caused by Russia’s invasion of Ukraine. Gulke says the European Greens party is saying “we can no longer put food into a gas tank.”
- Malaysia, the world’s second-biggest producer, is set to see a surge in demand for its products after top grower Indonesia said it will ban exports of RBD palm olein from April 28 to protect domestic supply, Bloomberg reports. Crude palm oil shipments can continue. The move will remain in place until domestic cooking oil prices ease.
“It appears there is a paradigm shift in in agriculture,” Gulke says, “which has caused parabolic prices in grains. There’s always some sort of a black swan that comes out of the woods and surprises us.”
In the U.S., another issue impacting the markets is slow planting progress. As of April 24, USDA estimates 7% of the U.S. corn crop has been planted. That compares to a five-year average of 15% by late April.
In soybeans, only 3% of the crop is planted, which compares to a five-year average of 5%. See AgWeb’s Planting Progress Maps
“The longer we wait, the better the chances are that we won’t plant more corn acres,” Gulke says. “If it’s possible, I’ve got 150 acres that I’m going to switch from soybeans to corn, if I can get it planted, because profits look $200 better for corn.”
Gulke expects to see some major shifts in acres in the Northern Plains, including the possibility of prevented plant acres.
“In those areas, the last thing we want is to be combining corn into the late fall and having to use high-priced natural gas to dry it,” he says. “There will be some land that won’t get planted this year.”
As such, Gulke says farmers should keep an eye on the Crop Progress report USDA issues on Monday, as well as the May 12 Crop Production and World Agricultural Supply and Demand Estimates reports.
“We’ll have to see how much they reduce the national corn yield due to late planting, and then how they adjust the demand side,” he says. “What we don’t want to see is an unchanged yield and a reduction in demand.”
Check the latest market prices in AgWeb’s Commodity Markets Center.
Get in Touch with Jerry
Do you have questions for Jerry? Contact him at info@gulkegroup.com or 312-896-2090 or GulkeGroup.com
Jerry Gulke farms in Illinois and North Dakota. He is president of Gulke Group Advisory Services. 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.
