It was another rough week for the grain markets as corn reached even lower levels than the week before. USDA released its Ag Outlook crop numbers on Thursday indicating the agency anticipates a decrease in total planted acres. Jerry Gulke of the Gulke Group says this could be positive for supply and demand, if other parts of the world follow suit.
“The bottom line of that 1.8 million acres is that in the past, when we’ve seen historically low prices or low profitability, some land doesn’t get planted,” Gulke explains. “It probably doesn’t happen in Illinois or Iowa but in other parts of the country, farmers will plant the crop they know they have the best chance of breaking even .”
Gulke compares this year to the 2012 growing season where prices leaked lower into June before a drought rally ensued, but he doesn’t anticipate the significant weather event that pushed corn up $3 just yet.
“Weather reports don’t look like there’s significant weather soon,” he says. “In fact, if La Nina is late, it could mean a perfect fall, but as most forecasters suggest, the jury is still out on that one.”
Listen to the Weekend Market Report with Jerry Gulke below:
While there are still many factors unknown, Gulke isn’t ruling out a rally before the year ends, but from what price level?
“There’s a lot of risk here yet, but pretty soon the risk is going to be on the upside,” he says, “even a dead cat will bounce if you drop it high enough.”
Farmers across the country can hope, but in the meantime, Gulke encourages producers to develop a plan and market accordingly.
“The danger lies in farmers not having a plan,” he says, adding that even in weeks like this, there is potential to be profitable if you play your cards right. "It is called risk management, and we have tools to act and react when/if needed," he added.
Gulke will explore risk management at his spring outlook conference in Chicago on March 23-24. For more information, email firstname.lastname@example.org.