After showing a decent bounce in the past few weeks, corn, soybeans and wheat prices finished this week on the negative side again. September corn was down about 15 cents for the week, September soybeans dropped nearly 40 cents and Kansas City wheat was 44 cents lower.
The Pro Farmer Midwest Crop Tour, which collected corn and soybean samples across seven states this week, confirmed USDA’s expectations for large yields. Following the end of the Tour, Pro Farmer analysts predict the national corn yield will reach 177.3 bu. per acre and the national soybean yield will reach 53.0 bu. per acre. Pro Farmer put corn just below USDA’s Aug. 1 estimate of 178.4 bu. per acre and put soybeans 1.4 bu. above USDA’s 51.6 bu. per acre estimate.
“Historically traders believe that a farmer-oriented survey like that will lowball the numbers because we have an invested interest in saying we don't want to see in high numbers because that depresses farm prices,” says Jerry Gulke, president of the Gulke Group. “And lo and behold, they said that except for Minnesota, things look pretty doggone good. You know, USDA or NASS might not be wrong at all.”
The grain markets also continue to be plagued by the ongoing trade disputes with China.
“The market is saying that there's nothing out here that says this tariff thing is going to be solved any time soon,” Gulke says. Our President and the President of China will not meet until the end of November. By that time, China will have incentivized South America to plant more beans. So, all of a sudden, you’ve got South America planting more beans and 785 million bushels of beans here that aren't going to go away really easily unless South America has a bust in production.”
The result: that’s a real big pill to swallow, Gulke says.
Grain prices normally dip going into harvest. But this could be a year of all new rules, Gulke says.
“The world changed with this tariff thing and the high stocks in beans,” Gulke says. “Soybeans had been profitable, and we’ve watched acres go up every year. So, corn had to vie for acres. Looking ahead, beans don’t work anywhere near as well as corn or wheat. Corn doesn’t have to be concerned about getting the acres—they will get them by default.”
As a result, Gulke says, we may not see that proverbial marketing low in soybeans and corn happen at the beginning of harvest.