August USDA Reports Confirm Too Much of Everything

Weekend Market Report with Jerry Gulke
( Farm Journal )

There’s a saying that big crops get bigger. According to USDA’s August Crop Production and World Agricultural Supply and Demand Estimates, the 2018 corn and soybean crops continue to grow.

Here are the key numbers:

Corn: Production forecast at 14.6 billion bushels, down less than 1% from last year. Based on conditions as of Aug. 1, yields are expected to average 178.4 bushels per acre, up 1.8 bushels from 2017. If realized, this will be the highest yield on record. Area harvested for grain is forecast at 81.8 million acres, which is down 1% from 2017.

Soybeans: Production forecast at 4.59 billion bushels, up 4% last year. Yields are expected to average 51.6 bushels per acre, up 2.5 bushels from last year. Harvested area is forecast at 88.9 million acres, which is down 1% from 2017.

Both corn and soybean prices dove after USDA increased each crop’s national average yield. Farmers and traders quickly questioned the yield estimates.

“If a person is skeptic, I suggest they get a copy of the WASDE report,” says Jerry Gulke, president of the Gulke Group. “It's pretty long, but you get the nitty gritty. They talk about the July weather, the advancement of the silking process and how good the crops looked. They have a methodology that they follow.”

Right now, the yield estimates measure the potential of this crop, Gulke says.

“Last year we grew a perfect crop everywhere, it seems like,” he says. “So, it's even hard for me to understand that how we can grow something better than last year.”

USDA pointed to the rapid maturity of this year’s crops, especially corn. A lot of places are dented already, Gulke says.

“We are way ahead of schedule and that’s what the WASDE talks about,” he says. “We know that within roughly 44 days of dent we're going to be black layered. We’re going to be black layered really early this year.”

The yield increase in soybeans was more of a surprise, Gulke says. But that isn’t the only reason prices crashed. USDA also predicts China will not be buying large amounts of soybeans any time soon.

“The shocker was that USDA agreed with what we’ve been saying—that China is not going to come back and buy as much as they would have otherwise, and that we're going to hold the lion's share of the of the global socks,” Gulke says.

Gulke encourages farmers to think about the three phases of marketing: greed, hope and fear.

“The government's probably ready to tell us that you were greedy if you didn’t $10 beans, and you hoped prices would rally back,” he says. “Now fear sits in.”

For next week’s Rest of the Story column, Gulke will be analyzing the state-by-state yields, production and acres for 2017 and 2018.

“I think that would be educational in itself and then I'll make some conclusions on it,” Gulke says. “We got our work cut out for us. It's going to be a rough three or four months to determine whether China indeed will come back.”


For that article and more analysis from Jerry Gulke, visit