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Ag Markets Provide Long-Term Cheer

December 21, 2013
By: Sara Schafer, Farm Journal Media Business and Crops Editor
gates TN harvest sunset 2013
  

Jerry Gulke reflects on the 2013 grain marketing year and provides insight for 2014 and beyond.

With Christmas only a few days away, Jerry Gulke says farmers should take a moment and acknowledge agriculture’s many blessings. True, prices are much lower now than they were at this time last year, but yields were also dramatically higher than 2012.

"We know things go in cycles," says Gulke, president of the Gulke Group. As the saying goes…What goes up must come down.

"Most of us got good yields, even with low prices," he says. "It could have been a lot worse."

Hear Gulke's full audio analysis:

 

For 2013, Gulke says, the U.S. just didn’t need a big crop. But, that’s what U.S. farmers harvested this fall. "Prices are dependent on what you grow this year based on what you used last year," Gulke says. "Demand was hurt last year because the world doesn’t want to eat $7 or $8 corn."

While corn prices aren’t anywhere near the $6.50 level from earlier this year, Gulke says there is an advantage to lower prices. "We’re down here at $4 where we’re going to create demand eventually," he says. "We’re going to change some minds of our global competitors. Do they really want to be in the business with us? Who can hang on the longest?"

The high prices of the last few years have attracted many farmers across the globe to the corn production family. While more competition can mean lower prices, Gulke says, a steady supply can further develop demand.

"I can remember complaining when Brazil entered the soybean market," he says. "But, low and behold, years later, we now we use pretty much all South America and North America can produce." That increase in supply resulted in a new price plateau.

Now that corn and soybean production is on such a global scale, Gulke says, if our competitors grow a poor crop, U.S. producers will benefit. If a major enough crop failure happens, Gulke says, U.S. farmers’ inventory in the bins will be worth more than money in the bank. "But I don’t know when that will be," he says. "It will probably be up to weather all over again."

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