Jerry Gulke: Pre-Report Grain Market Jitters
The grain markets were lower this week, ahead of next week’s USDA reports.
December corn prices were down 15.5¢, for the week ending Nov. 5. March corn prices were down 14.75¢. January soybean prices were down 45.5¢, and March soybean prices were down 43¢. December wheat prices were down 5¢ and Minneapolis wheat prices down 40.25¢,
On Tuesday, Nov. 9, USDA will release its monthly Crop Production and World Agricultural Supply and Demand Estimates reports.
These reports could hold a surprise or two, says Jerry Gulke, president of the Gulke Group. The reports may also follow suit of other recent reports and provide downward price pressure.
“Soybeans have been in a downtrend since last May, I feel like a broken record. We topped old crop corn there, as well,” he says. “With each report, we've had a negative response.”
The soybean market specifically has been plagued with consistent negative news, he says.
“In the October report, USDA increase soybean carryout,” Gulke says. “Plus, we've had just the opposite of last year's weather in Brazil — and more acres. And we've got wishy-washy China saying they are going to import a lot of beans, but not as much as last year by a couple of tons.”
In corn, he says, the focus will be on USDA’s yield estimate. Ahead of Tuesday’s reports, analysts are predicting small increases in yields, Gulke says to the tune of around 0.5 bushel in each corn and soybeans.
“Based on what we’re hearing from our clients, traders may have grossly underestimated the increase in yield,” he says. “We're finishing corn and I am again shocked by the by the yield on some of our poor ground. We didn’t think we’d make APH, and we’ve exceeded APH — and we didn’t get any rain until July. I may have to take back everything negative I’ve said about the high cost of corn and soybean seed when the genetics are that good.”
Gulke says USDA may make adjustments to both yield and acres on Tuesday. Or they could delay those changes until January.
“I think there's more things out there and uh underneath the market that traders are concerned about and one of them is maybe getting blindsided by the report on Tuesday,” he says. “We may have a surprise coming and that could be in a higher yield.”
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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.
