“The market really fell apart this week; we were really perched on a ledge,” says Jerry Gulke, president of The Gulke Group. “We were hugging support; when it rallied up, we thought, “Okay maybe that’s it on the downside.’ Then it falls back down again. If you knock on that door often enough somebody will open it. And somebody did yesterday and today.”
Gulke adds that any time you close at new lows for the year, that’s not a good omen. “The repeated loss of a few cents here and a few there is the leaking effect: All of a sudden $4.20 corn is gone and you wonder where that went,” he says. “It’s going to be a while before we turn this around, We need a catalyst and maybe June 30 will provide that — maybe the plantings report will show farmers turned away from corn.
“What we don’t want to see happening is we plant too much of everything,” says Gulke. “A million or two million acres of soybeans at the expense of corn doesn’t mean much one way or the other because each million acres of beans is another 46 million bushels or thereabout. Another hundred bushels of beans won’t make much difference; we won’t see a better price until there’s a demand surprise or South America has a crop problem.”
Gulke believes some farmers are making last minute changes and maybe the USDA corn acreage number will prove too high. Some of the small grains are lower cost to plant and maybe can even let you make some money, he says. One other change he notes, however: “It’s cheaper to grow corn in eastern Canada than it is to import it now, given the change in currency value. If futures are $4 and it costs a Canadian farmer $4.80, now suddenly it makes more sense to grow it than buy it to feed your hogs or dairy cattle.”
Avian flu brought a spark to the livestock markets: Tuesday’s cold storage report found less beef than expected. Then add the effects of bird flu: “Figure 7 million dead turkeys, plus it takes a couple months to turn the turkey barn around. Then figure some pullet producers have been hit, too, reducing replacements. Maybe there’s going to be more demand for pork.”
Listen to all of Gulke’s comments via the link below.