For the week September corn was down 32¼ cents, December corn fell 32 cents, September soybeans lost 18 cents, November soybeans dropped 14¼ cents, September soybean meal lost $6.10 per short ton and September soybean oil fell 18 points. September Chicago wheat fell 2¼ cents, September Kansas City wheat was down ¾ cents and September Minneapolis wheat dropped 3¾ cents.
Corn futures posted lower weekly closes, falling more than 30¢. Part of the move was tied to the bearish USDA reports with acreage up 1.4 million to 91.5 million.
Jerry Gulke, president of the Gulke Group, says the corn figures were also bearish compared with expectations. Acreage came in 1.122 million above the average trade guess and quarterly stocks were 120 million bushels above estimates.
“Many of us thought there would be a few less acres in corn and it turned out to be more. Corn prices reacted quickly and violently due to the shock,” he says.
Some in the trade had bet on lower acres due to weather issues this spring, which forced producers to take prevent plant, and because of flooded fields in the northwestern Corn Belt. However, Gulke says the survey cutoff was June 15 so those acres have not been accounted for yet but will be reconciled by USDA through lower harvested acres.
“We gained 1.4 million acres on the survey and likely lost around 1 million acres in Iowa, Minnesota and South Dakota due to flooding,” he says.
The state-by-state comparisons from the June acreage to the March intentions report showed the biggest corn acreage increases in Kansas, which was up 500,000 acres. Iowa was up 300,000 and Minnesota added 200,000 acres. Other states added smaller amounts, but Illinois and Indiana were unchanged, according to Gulke.
The quarterly stocks figure on corn was also bearish at 4.993 billion bushels, which was 890 million bushels above 2023.
“Looking at the stocks report, I felt they were overstating the stocks, and they increased the stocks in corn rather than decreasing them. All our talk about reconciling what we felt was a missed number, it got worse,” Gulke says.
Is there any hope left for the corn market?
Gulke says yes because the market has removed all the risk premium and the weather in July and August will be much more important for the corn crop than the weather in June.
“If we get into this hot dry weather for summer that’s been widely predicted from the weather experts then we have a chance to rally back again. As quickly as we fell, we could put that 20¢ to 30¢ back on again. The trade will be focused on the six- to 10-day forecast, so we have to be pretty nimble on our marketing plan,” he explains.
Gulke is also optimistic these lower corn prices will stimulate demand by end users.
“Some flash sales and significant corn buying by China would be wonderful,” he speculates.
Plus, exports are already running 38% ahead of a year ago.
To add insult to injury, Gulke says the National Agriculture Statistics Service had problems with the release of the report, and it was delayed for much of the viewing public, including farmers. He says the market crashed shortly after that.
“In the first minute after the report came out the market took out the highs and the lows in September corn. It’s not manipulation, it’s probably fast markets or algorithms kicking in, but the market was moving and once we finally got the information we said, no wonder,” he says.
Gulke says this calls for USDA to stop putting the numbers out during trading hours because it puts farmers at a disadvantage.
“We need a level playing field because this creates volatility that costs farmers money,” he adds.
For more information, contact Jerry at info@gulkegroup.com.
