Jerry Gulke: Is the Market Reflecting Corn Diseases?
Grain prices saw improvement this week. December corn prices were up 10.25¢, for the week ending Sept. 17. March corn prices were up 8¢. November soybean prices were down 2¢, and January soybean prices were down 2¢. December wheat prices were up 20¢.
So far, 5% of the U.S. corn crop has been harvested as of Sept. 12, per USDA’s crop progress report. Jerry Gulke, president of the Gulke Group, predicts that percentage to jump significantly in the next 10 days.
“Harvest should really pick up next week,” he says. “The weather looks good, and farmers have started combining soybeans and corn. Some spotty yields are coming, and there’s a big variance in yield.”
Disease talk in corn is prevalent this fall, Gulke says.
“We’re hearing more reports from our clients,” he says. “Some were thinking they would have 200 bu. to 210 bu. corn, but it came in at 150 bu. Diseases are bringing down test weights and almost acting like an early frost.”
One such disease is tar spot, which is taking a toll on corn crops in parts of Illinois this week, says Ken Ferrie, Farm Journal Field Agronomist and owner of Crop-Tech Consulting, Heyworth, Ill.
“In a number of fields, not only have the wheels come off the bus, but it's sliding down the highway on its frame and the sparks are flying,” he says.
Fields with heavy disease pressure that were not sprayed with a fungicide are unlikely to produce a high yield or what could have been a record yield. Now, they are most likely to produce an average to slightly above average crop.
“At best, those fields will still produce a good crop but without a fungicide application, we probably left money on the table,” Ferrie says.
Gulke and others are already calculating yield impacts.
“If you get 8% reduction in test weight (51-52 lb TW) on 25% of the corn crop in the United States, that's a 2% reduction in total yield or about 3.5 bu. per acre,” he says. “That tightens things again. Traders are starting to do those calculations. So, ended the week stronger because of that.”
Gulke says grain buyers will be closely watching harvest progress, trying to secure grain.
“We could harvest this crop really quickly, perhaps much quicker than normal. Will that bring in farmer selling? The tightness we’re seeing in the basis is a direct result of buyers needing the grain now,” Gulke says. “Buyers are saying, ‘Please don’t store it, sell it to me. I need it.’”
This proves, Gulke says, price is secondary to need: “You can pay a lot of money for a small amount to get you carried over until the price goes down and we harvest more, and the pipeline fills..”
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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.