Jul 10, 2014
Home| Tools| Events| Blogs| Discussions Sign UpLogin

Corn Prices on a March to $7/bu.

January 15, 2011
Wheat prices lead the way this week as rumors of a big China buy take prices higher.
Market volatility will continue, but grain prices are likely on an upward trend for some time.   

 

History is the best predictor of the future. To get the best prediction, however, one must be sure you are looking at the right point in history.

It’s easy to draw correlations between the recent grain price run up in 2008 and today’s market situations. However, that price spike was driven largely by energy and market speculation. Today’s market conditions are primarily due to a real shortage of grain and an intense battle for acres in 2011, says Jerry Gulke, president of the Gulke Group.

Gulke Group Inc.

www.GulkeGroup.com
707-365-0601

"The only thing I can recall that is anywhere near this is 1994, ‘95, ’96," Gulke says. "Ironically, it started with bad wheat crops. A lot of the world ate feed wheat and China was an exporter at that time, but they went from being an exporter to an importer."

"I went back and did some research on it this week. We realized we were done planting then, you can’t get any more acres and your only option was to curb demand. So whatever we produce is December is enough. We never got December anywhere close to what July was. In fact, July traded $2.00/bu. over December at the widest."

What is similar to now and 2008, and any bull market for that matter, is the wild volatility that exists. Even if prices continue their rapid march to $7.00/bu., there are going to be down days and significant swings in the market.

"You can say I’m going to right two months from now, but in the meantime, you might have a 50-cent margin call. That indicative of a lot of uncertainty. You’re going to hear things like when is the government going to step in. When is China going to go broke? You’ll hear all kinds of stuff, but the bottom line is we haven’t done a very good job of curbing demand yet."

 

 

See Comments


 
Log In or Sign Up to comment

COMMENTS (1 Comments)

NW Iowa Farmer - IA
$7 will only be a blip on the screen when corn screams to $9. Start buying $7.00 calls for May the money is in the calls. :)
4:18 PM Jan 21st
 



Name:

Comments:

Receive the latest news, information and commentary customized for you. Sign up to receive the AgWeb Daily eNewsletter today!.

 
 
Enter Zip Code below to view live local results:
bayer
 
 
The Home Page of Agriculture
© 2014 Farm Journal, Inc. All Rights Reserved|Web site design and development by AmericanEagle.com|Site Map|Privacy Policy|Terms & Conditions