Jerry Gulke: Harvest is Over but the Grain Price Party Isn’t

The grain markets reacted to this month's Crop Production and World Agricultural Supply and Demand Estimates reports completely differently than the last several months.
The grain markets reacted to this month's Crop Production and World Agricultural Supply and Demand Estimates reports completely differently than the last several months.
(AgWeb)

The grain markets reacted to this month's Crop Production and World Agricultural Supply and Demand Estimates reports completely differently than the last several months. Instead of sinking lower, prices received a nice lift.

December corn prices were up 24.5¢, for the week ending Nov. 12. March corn prices were up 22.5¢. January soybean prices were up 37.75¢, and March soybean prices were up 37.5¢. December wheat prices were up 50.50¢.

Here are the report highlights for soybeans:

  • Soybean production is forecast at 4.42 billion bushels, down 1% from the previous forecast but up 5% from last year. Based on conditions as of Nov. 1, yields are expected to average 51.2 bu. per harvested acre, down 0.3 bu. from the previous forecast but up 0.2 bu. from 2020. 
  • USDA reports the U.S. soybean outlook for 2021/22 includes lower production and exports and higher ending stocks. Lower yields in Indiana, Iowa, Ohio and Kansas account for most of the change in production. 
  • Exports are reduced this month reflecting reduced global imports and lower-than-expected shipments through October. With use falling more than supply, soybean ending stocks increased 20 million bushels.
  • The U.S. season-average soybean price for 2020/21 is forecast at $12.10 per bushel, down 25¢.

And the report highlights for corn:

  • USDA estimates production at 15.1 billion bushels, up less than 1% from the previous forecast and up 7% from 2020. Based on conditions as of Nov. 1, yields are expected to average 177 bu. per harvested acre, up 0.5 bu. from the previous forecast and up 5.6 bu. from last year. 
  • On the supply and demand front, USDA’s corn outlook calls for greater production, increased corn used for ethanol and marginally lower ending stocks. 
  • Corn used for ethanol was raised 50 million bushels. With use rising slightly more than supply, corn ending stocks are lowered 7 million bushels. 
  • The season-average corn price received by producers is unchanged at $5.45 per bushel.

“Many were expecting an increase in soybean yield — not a decrease,” says Jerry Gulke, president of the Gulke Group. “There were some inherently bullish things in the report.”

As of Nov. 7, USDA estimates 84% of the U.S. corn crop is harvested and 87% of the U.S. soybean crop. With harvest nearly complete, these price moves are encouraging, Gulke says.

“Now that harvest has basically ended, prices have found some solid support at some really good levels,” he says. “It was a significant change in the psychology of the market.”

Like grain prices, the U. S. Dollar has gained strength. 

“That is a double-edged sword, as our products become less competitive globally,” Gulke says. “But we don't have global surpluses yet like we may have down the road.”

At the farm level, Gulke says basis has stayed strong through harvest.

“This shows demand may be stronger than we thought,” he says. “There are going to be a lot of projections on the upside now to decide how high is high enough for prices.”

 

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.

 

Latest News

Corn Prices Higher After USDA's Bullish Reports, Soybeans Flat: Where Do the Markets go Now?
Corn Prices Higher After USDA's Bullish Reports, Soybeans Flat: Where Do the Markets go Now?

Grains end mixed with strong gains in corn in reaction to USDA's 90 million acre estimate and lower than expected stocks. But how much higher can corn go? Garrett Toay, AgTraderTalk, shares his thoughts.

Where Did All the Corn Acres and Principal Crop Acres Go? The Two Biggest Questions from USDA's Big Prospective Plantings Report
Where Did All the Corn Acres and Principal Crop Acres Go? The Two Biggest Questions from USDA's Big Prospective Plantings Report

USDA says farmers intend to plant 90 million acres of corn this year, which was lower than what the trade expected leading into USDA's big Prospective Plantings report.

USDA Shocks the Markets with 90 Million Corn Acre Estimate:  Where do Corn and Soybean Prices Go From Here?
USDA Shocks the Markets with 90 Million Corn Acre Estimate: Where do Corn and Soybean Prices Go From Here?

USDA provides bullish reports for corn, but neutral to bearish for soybeans and wheat. Brian Splitt, AgMarket.Net, has details.

APHIS Now Thinks Wild Birds Are to Blame for Highly Pathogenic Avian Influenza's Arrival on Four U.S. Dairies
APHIS Now Thinks Wild Birds Are to Blame for Highly Pathogenic Avian Influenza's Arrival on Four U.S. Dairies

The livestock industry continues to grapple with the first confirmed cases of HPAI in cattle, while federal and state agencies continue to assure consumers there's no concern about the safety of the U.S. milk supply.

Markets Chop Ahead of Report and Month End:  What Will the Markets Trade After the Reports?
Markets Chop Ahead of Report and Month End: What Will the Markets Trade After the Reports?

Grain and livestock markets see 2-sided trade Thursday morning ahead of month end and USDA data. What will the markets trade after the reports? Randy Martinson, Martinson Ag, has insight.

The Untold Farmer Stories Of Ukraine: Q&A With Howard Buffett
The Untold Farmer Stories Of Ukraine: Q&A With Howard Buffett

Farmer and philanthropist Howard Buffett held a fireside chat during the 2024 Top Producer Summit to share his experiences visiting the front line of Ukraine over the past two years.