Year-End Stocks Keep Prices in Check

Weekend Market Report with Jerry Gulke
( Farm Journal )

For months, Jerry Gulke feared U.S. farmers would produce too much of everything. The Sept. 28, 2018, Quarterly Grain Stocks report showed that could have been the case.

USDA reported old-crop corn stocks in all positions on Sept. 1, 2018 at 2.14 billion bushels. Of those total stocks, 620 million bushels are stored on farms, which is down 21% from last year. Off-farm stocks, at 1.52 billion bushels, are up 1% from a year ago.

Old-crop soybeans stored in all positions on Sept. 1, 2018, totaled 438 million bushels, up 45% from this time last year. Soybean stocks stored on farms totaled 101 million bushels, up 15% from a year ago. Off-farm stocks, at 337 million bushels, are up 58% from last September.

USDA revised the 2017 soybean production up 19.1 million bushels from the previous estimate, by increasing the 2017 yield 0.2 bu. to 49.3 bu. per acre.

“In soybeans, you can guess what you’re using pretty accurately,” says Gulke, president of the Gulke Group. “You know the bean bushels crushed (meal and oil)and exports are reported weekly. So, when stocks are more than calculated, it is assumed had to been because of production/yield.”

For the week, corn prices closed around a penny down, while soybean prices were dropped 2 to 3 cents. The week was showing positive price movement, until the report on Friday.

“We produced too much again,” says Gulke, president of the Gulke Group. “It’s been awhile since we’ve had these kinds of stocks in soybeans; corn running about like last year”

Last week Gulke discussed the seasonal price patterns and if 2018 would be another year of early harvest lows for prices.

“We’ve tested the lows enough that most people thought we’d probably put in the season loans,” he says. “But the extra stocks are something to be reckoned with.”

A hopeful support for grain prices is a growing livestock herd. According to USDA’s inventory of all hogs and pigs on Sept. 1, 2018, total inventory was 75.5 million head, up 3% from a year ago, and up 3% from June 1, 2018.

You would think that would increase feed usage, Gulke says. “Yet, we don’t seem to come up with that.”

On Oct. 11, USDA will release its monthly Crop Production and World Agricultural Supply and Demand Estimates reports. Gulke says USDA adjust its demand picture, as well as increase the size of the 2018 corn and soybean crops and will have to account also for larger carry-in stocks (carry out stocks reported on Friday).