The grain markets posted big moves this week. May corn was up nearly 33¢ and December corn prices were up 27¢, for the week ending April 8. Maybe soybean prices were up $1.05 and November soybean prices were up 87¢. All of the wheat contracts were up this week by 60¢ or more.
On April 8, USDA released its monthly World Agricultural Supply and Estimates (WASDE) report.
For corn, USDA’s outlook is for offsetting changes to feed and residual use and corn used for ethanol production, with unchanged ending stocks. For soybeans, USDA calls increased exports and seed use and lowered ending stocks.
In South America, USDA lowered its Brazil soybean crop estimate by 2 million metric tons (MMT) to 125 million on Friday. Highlights from the South American revisions include:
- Brazil Soybean Crop: 125 MMT, Down 2 MMT
- Brazil Corn Crop: 116 MMT, Up 1 MMT
- Argentina Soybean Crop: 53 MMT, Unchanged
- Argentina Corn Crop: 43.4 MMT, Unchanged
Read More: USDA’s April WASDE Wasn’t Extremely Bullish, Why Did Prices Shoot Higher to Close the Week?
“They didn’t do much with the Ukraine crop because they had a good crop last year,” says Jerry Gulke, president of the Gulke Group. “They have old-crop supplies to sell from a global standpoint and USDA is still showing that grain as being available.”
The friendly report, combined with other factors, helped grain prices jump. This put added pressure on the spring acreage mix, Gulke says.
“With soybeans going down and December corn going up nearly 50¢ a bushel since the report, corn in some cases got to approach $175 to $200 an acre better than soybeans,” he says. “So suddenly you say, ‘if I can get my hands on $1,500 an acre anhydrous, I might just find some more corn.’ I think in the end we’ll probably gain some acres and corn.”
Gulke says some acres that were going to go into CRP may actually be planted due to low CRP payments.
“They won’t be highly productive, but we’ll try to find bushels and acres wherever we can,” he says.
Once the spring crop insurance discovery period is over, Gulke says, it has to be up to the market to ask for more acres.
“We may be fighting for acres well into the first week of May or so, and that coincides with the May WASDE, which comes out on May 12,” he says. “Last year that topped the market.
While high prices are good for farmers selling grain, they are not for buyers of that grain, Gulke says.
“They will be paying a lot of money for corn for as far as the eye can see, I think there’s a seven in front of every month all the way out of the July of 2023,” he says. “Plus, we have high-priced soybeans. This thing could last all through the marketing season.”
If prices get high enough, Gulke says, everybody is going to have to do without some of the product they were used to buying, whether it’s meal, beans or corn.
“The market is going to go to a point where it says, you can ill afford to do this anymore — you’re going to have to cut back,” he says.
Gulke says the grain markets also went higher based on the latest unfolding in the Russia-Ukraine war. At least 50 people, including five children, were killed after Russian forces carried out a missile strike on a railway station in Kramatorsk, eastern Ukraine, that was being used by civilians trying to flee the fighting, Ukrainian officials said Friday, CNN reports.
Check the latest market prices in AgWeb’s Commodity Markets Center.
Get in Touch with Jerry
Do you have questions for Jerry? Contact him at info@gulkegroup.com or 312-896-2090 or GulkeGroup.com
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.
