A questionable weather forecast and a flash sale of soybeans to China helped commodities close higher this week, with the exception of November soybean prices.
September corn prices were up 8¢, and December corn prices were up 11.25¢, for the week ending July 23. August soybean prices were up 6.75¢, while November soybean prices were down 12.25¢. September wheat prices were up 16¢
“The dry spots are getting worse, and the good spots are still in decent shape with the proverbial comment of we have to have rain this week,” says Jerry Gulke, president of the Gulke Group. “But we may have run out of “weeks.’ We’re in the crunch time. Soybeans are showing stress with pod filling a big question mark.”
Gulke says his farm in northern Illinois did not receive any of the forecasted precipitation this week. It has been consistently dry.
“The dry parts of the Corn Belt, which appears to be north of I-88 in Illinois and on into Minnesota, North Dakota and South Dakota, show major crop stress,” Gulke says. “I’ve already trimmed my farm’s soybean production by 10% to 15%, and I will likely drop my corn production potential.”
Harvest of spring wheat in the Northern Plains is quickly wrapping up.
“It doesn’t take long to harvest half a crop,” Gulke says. “NASS may be correct in their forecast of 45% to 50% of last year’s production.”
With such a deep reduction in spring wheat yields due to drought, Gulke expects soybeans to follow suit.
“The soybean crop is really on the ragged edge in the dry areas of the northern Plains,” he says. “Remember that’s an area of about 10 million to 12 million acres of soybeans.”
USDA will release its first official estimate of the 2021 U.S. corn and soybean crop production on Thursday, Aug. 12. Objective yield surveys across hundreds of fields in the Midwest will not be used for the August crop estimate. The objective yield survey in August was canceled last year due to the COVID-19 and it was not reinstated this year.
The production estimates will be generated by subjective farmer surveys, satellite data, weather data, yield models, etc. The objective yield surveys will be used for the September, October and November crop estimates.
“It’s unlikely the yields will change,” Gulke says “NASS will probably kick the can down the road until September when they have objective yield data. By September we’ll have a lot of grain harvested, so it may be the most accurate handle on the crop side we’ll have this September compared to anything in the last decade.”
In addition, the Pro Farmer Crop Tour will provide from-the-field crop reports and estimates this month.
For the Aug. 12 report, Gulke says the demand numbers will be the ones to watch.
“China has been seen as a lagging buyer for soybeans, and concerns have been mounting in terms of the real demand for ag commodities,” he says. “The export line item for corn and soybeans will be important to see, as well as what NASS says is happening to the feeding of wheat.”
Gulke will also be watching for NASS’s Safrina corn crop estimate.
“USDA has been printing production numbers for the total corn crop in Brazil of 93 million metric tons (MMT), which is 4 MMT to 6 MMT higher than most trade guesses and private forecasts,” Gulke says. “Brazilian soybean basis seems to indicate Brazil will not be the competitor into our harvest as I once thought, suggesting they are using more soybeans internally.”
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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.
