The dead cat bounced. After a near vertical plunge for several weeks, corn and soybean prices have posted a significant turnaround. For the week ending Aug. 3, 2018, corn, soybean and wheat prices were higher.
What’s even more impressive is the three-week changes. September and December corn prices are nearly 30 cents higher, while September and November soybeans are nearly 70 cents higher. December wheat are also up about 70 cents for the three-week period.
The continued dry weather in parts of the Midwest is likely helping lift prices—especially in soybeans, says Jerry Gulke, president of the Gulke Group.
Currently 15% of the nation’s soybean crop is in drought conditions, per UDSA’s latest report.
The 30-day forecast doesn’t show much relief in sight, as the majority of the Corn Belt will be below normal in precipitation.
“This is August, so we knew this was coming,” Gulke says. “We are probably a little bit more sensitive earlier in August than we would have been otherwise because the crop is further along that average.”
Agronomists have been telling Gulke that there are now enough concerning areas in the country that corn and especially soybean yields could be trimmed.
“I don't know, but I don't care right now as long as the market psychology says we're going higher,” Gulke says. “Somebody bought beans late Friday and shoved these beans higher to where we closed over $9, and $9 has been kind of a proverbial support level.”
While prices have increased, many farmers are facing a wide basis.
“My basis has widened out significantly for soybeans, not necessarily for wheat and corn,” Gulke says. “We’ve never had a 90-cent basis, and yesterday was a minus 91. That's North Dakota type basis, not Illinois basis.”
USDA Reports Out Aug. 10
On Friday, Aug. 10, USDA will release its monthly round of Crop Producer and World Agricultural Supply and Demand Estimates. Overall, Gulke expects the report to be bearish.
“I would think USDA has no choice but to raise the exports for corn because we're ahead of last year already,” he says. “I also don't know how they're going to get by without not raising the carry over for this year for soybeans because of cancellations by China. I don't think there's a snowball's chance that they could say, ‘Well because we grew more, we're going to sell more.’ They've already halfway admitted that the lack of demand from China isn’t going to end quickly.”
For more analysis from Jerry Gulke, find his weekly audio and in-depth written commentary at AgWeb.com/Gulke.