The grain markets are focused on the weather and its impact on the corn and soybean crops.
December corn prices were down 20¢, for the week ending July 15, while November soybean prices were down 52¢. All wheat prices were down 80¢ to $1 or more.
On Tuesday, July 12, USDA released its monthly Crop Production and World Agricultural Supply and Demand Estimates (WASDE) reports. The information was pretty much as the market expected, says Jerry Gulke, president of Gulke Group.
“With no bullish surprises in the reports, the market returned to weather,” Gulke says. “We’ve had rain over the last week and the continued concern about demand — not just a demand reduction but demand destruction.”
In general, he says, the markets seem to believe inflation has stopped or at least isn’t going any higher for the immediate future.
“Some people were in the market buying grain back when the hype was we’re going to have a famine and were not going to have enough stocks,” he says. “I think that caught a lot of people long and wrong.”
After surging higher, the grain markets have reset. Gulke says it seems like the markets knew they needed a reset.
Focus on Crop Conditions
As of July 10, USDA estimates 64% of the U.S. corn crop is in good or excellent condition, which matches the July 5 report.
For soybeans, 62% of the crop is in good or excellent condition. That is one percentage point lower than the previous week.
After touring part of the northern Midwest and visiting with clients this week, Gulke says the main consensus he heard is soybeans are small, but corn is in good shape.
“There are some dry pockets out there, of course, mainly in the western Corn Belt,” he says. “We could have a record yield up here this year in some parts of northern Illinois.”
These condition ratings and the weather forecast will likely lead the market direction for the weeks to come.
“We’re in a position now where we almost need a crop scare to get the grain prices back up again to anywhere near where they were,” he says.
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 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.
