It’s time to fall in love with the corn market…all over again.
The week ended on a sweet note and not just because of Valentine’s Day. Jerry Gulke, president of The Gulke Group, says several signs are pointing to a bottom forming in the corn market.
"We’re in a confused state of the market," he says. "The traders really don’t know what we think or what we’ll do this spring, and maybe we don’t either."
Hear Gulke's full audio analysis:
He says as of now, the market seems to be thinking farmers will plant a lot more of beans this year. "Yet, we don’t have evidence of that," he says. "We probably really won’t know until the end of June what we really planted."
On top of that, China has been cancelling grain shipments.
Yet, the corn market has been continuing in a sideways trading range. "The corn market has had all the opportunity this week to close lower," Gulke says. But, this is the third week in a row where we’ve been higher. Everybody knows we have an oversupply of corn and we still don’t go any lower."
Gulke says that March 2014 Corn closed higher this week than it has since November 2013. "That is pretty significant," he says.
"We’ve gone through all that negative news and it seems like the market is trying to absorb all the grain that we can sell, which is really an interesting situation." He says you typically see this satiation when the market finally tries to put in a bottom.
Uplifting Economic News
This week, Gulke lead his annual member conference in Palm Springs, Calif. Attendees heard several experts speak about the global economy, grain supply and demand and the farm bill.
Gulke says his big takeaways were:
U.S. needs a small, but steady economic booth. "If we could increase GDP, even by a small amount, it could get us out of our economic malaise," he says. U.S. economic growth would be good for agriculture, he says, as more people would be able to eat high-priced meat, which equals a constant buyer for grain.
Global demand for feed grains in strong. "Even with $7 and $8 corn in the U.S., someone else stepped in and filled that void so we didn’t destroy global demand," Gulke says. "Now those customers are coming back."
China will continue to be the big dog. For both the corn and soybean markets, China will be the driving force. "We just have to live with that," he says. "China can make or break our prices, but I don’t think they’ll do that on purpose. I think it will still depend on weather and demand."
Have a question for Jerry? Contact him at 815-721-4705 or firstname.lastname@example.org.
For More Information
See current market prices in AgWeb's Market Center