Jerry Gulke: Global Appetite for U.S. Grain Continue

The grain markets continue their steady march upward. March corn prices were up 34.25¢ and March soybean prices were up 41.75¢ for the week ending Jan. 15. March wheat up 37¢.

While those are impressive closes for the week, they only tell part of the story, says Jerry Gulke, president of the Gulke Group.

“We can get an idea of the momentum of the market by looking at how the markets close in relation to the ranges prices moved in a week,” he says. “For March corn, we had a range of 50¢ this week. That's about $100 an acre for people that have old-crop corn to sell.”

For soybeans, he says, the range of prices this week was almost 80¢. 

“The ranges look good,” Gulke says. “What you don’t want to see is a 50¢-per-bushel range in corn, for example, and we close at the low of the range for the week. That would indicate a problem.”

USDA Reports Send Prices Higher

On Jan. 12, USDA released its annual crop production report. Highlights include:

• U.S. corn growers produced 14.2 billion bushels in 2020, up 4% from 2019. Corn yield in the U.S. is estimated at 172.0 bu. per acre, 4.5 bu. above the 2019 yield. 
• Soybean production for 2020 totaled 4.14 billion bushels, up 16% from 2019. The average soybean yield is estimated at 50.2 bu. per acre, 2.8 bushels above 2019.

In the Grain Stocks report, corn stored as of Dec. 1, 2020 was estimated to be down fractionally from Dec. 1, 2019. Soybean stocks were down 10% from a year earlier. Corn stored in all positions totaled 11.3 billion bushels, while soybeans totaled 2.93 billion bushels. 

“The statistics we’ve received from NASS leave a lot to be desired,” Gulke says. “We’ve seen this over the last couple of years where all of a sudden we found we didn't really have as much corn in stock or beans in stock. What would have been the price of grain if we would have known we didn’t have that supply out there?”

This week’s report show, Gulke says, there were less corn stocks going into Sept. 1. In addition, the national corn yield was nearly 4 bu. per acre lower. 

“NASS says they did 10 times as many surveys for this January report than they did for previous reports,” Gulke says. “Well, 4 bu. per acre is over 300 million bushels, and that's what caught the market by surprise. All of a sudden, we have carryover well under 1.6 billion bushels. That’s a huge difference when earlier this year we thought it could be around 2.2 billion bushels.”

U.S. Dollar Impact
Gulke has also been keeping an eye on the U.S. dollar. After moving lower for quite a while, it was higher this week.

“A lot of people will look at it and say well when the dollar is cheap that makes us more competitive. Then when the dollar goes up, we're less competitive,” he says. “That's true if you have too much of everything.”

But when you don't have the stocks, it's another matter so much of what it costs, especially for China, Gulke says. For buyers who are behind in purchases, a rising dollar can speed up global sales.