March corn prices were up 6.25¢, for the week ending Dec. 10. May corn prices were up 5.75¢. January soybean prices were basically flat, while March soybean prices were up 3.5¢. March wheat prices were down 18.25¢.
USDA released its monthly Crop Production and World Agricultural Supply and Demand Estimates (WASDE) reports on Dec. 9. Highlights of the WASDE report include:
- Corn: This month’s 2021/22 U.S. corn supply and use outlook is unchanged from last month. The projected season-average farm price remains at $5.45 per bushel.
- Soybeans: Soybean supply and use projections for 2021/22 are unchanged from last month. Although soybean crush is unchanged, soybean oil production is raised on a higher extraction rate.
- Wheat: The outlook for 2021/22 U.S. wheat this month is for slightly lower supplies, unchanged domestic use, reduced exports, and higher ending stocks.
“The wheat market didn’t take the WASDE report very well,” says Jerry Gulke, president of the Gulke Group. “Of course, it has started this downtrend before the crop report—it had dropped a dollar in about three or four days. I think the traders probably smelled something was coming.”
USDA’s global wheat outlook for 2021/22 calls for higher supplies, greater consumption, increased trade and higher ending stocks. Supplies are projected rising by 4.3 million tons to 1,067.5 million, primarily on the combination of increased beginning stocks for Australia and the EU and upward production revisions for Australia, Russia, and Canada. Australia’s production is raised 2.5 million tons to a record 34 million ton.
“When you’re on a trend and suddenly the government says things that indicates that it changed that trend, the traders will look at it and say, ‘Well, I don’t know where it’s going from here, but I know where it’s not going,’” he says. “Since we’re increasing carryout and increasing the crop size for our competitors, the market just dropped.”
Oftentimes, Gulke says, the traders will say, ‘As wheat go, so goes corn.’
“Let’s hope not,” he says. “Let’s hope there is not some negative news that comes into the corn market.”
Soybean and canola oil were both down for the week. He says they continue to be important markets for farmers to watch.
“We’re not gravitating towards the soybean oil and biodiesel situation as we once thought we were,” Gulke says. “But I’m not so sure that global demand for this stuff is not going to exceed what any political leader can do with the demand that’s surfacing. Even airlines are asking for this type of biofuel to cut the admissions. I’m not sure this is over in soybean oil, but it sure shook the loose leaves off the tree.”
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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.
