Editor's Note: This story has been updated to accurately reflect the March 20 audio report, which does not mention Stats Canada. We regret the error.
The week ended March 20 was a good one for markets overall, according to Jerry Gulke, President of The Gulke Group. A possible weakening in the dollar is one reason he credits. “Between 2000 when Pres. Bush took office and the time Pres. Obama came in, the U.S. dollar dropped considerably and put a bottom in. Then we traded sideways for about six years before it broke out to the upside. Now the dollar has recovered about 60% of the total loss in value that was seen.” That could be the extent of the rally, he says. “That’s good news; the dollar affects exports, especially soybeans and maybe wheat where we have a lot of selling competition.”
In response to Informa’s acreage estimates, released last week, given the context of his own client survey, Gulke said “they are pretty lofty on beans.” He doesn’t think we’ll see 88 million acres of beans; maybe 87.5 million. “Everyone seems to have the trend right: Less corn, more beans. But a shift of 1-2 million acres of beans won’t matter much to the market. We have enough on hand that it would need a drop to 86.5 million to reduce carry-over to where we’d need a good crop.”
Gulke says Informa’s 600,000 acre increase in sorghum - up 1 million from last year - makes sense given the strong (non-GMO) export demand, especially from China. “We see acreage shifting from Texas to Kansas, and even some Nebraska dryland given sorghum’s lower cost to plant and better drought tolerance.”He also notes that states such as North Dakota also have spring wheat and barley as other options.
Of course Mother Nature will weigh in between now and the June plantings report, he notes. “It looks like a pretty decent spring but there’s talk August could be warm and dry. That’s the time that makes soybean yields so if that bias continues it could move pricesI We think we could see 50 cents upside potential for corn and $1 for soybeans between now and June and we want to stay flexible and not lock in losses with that potential out there.”
For Gulke’s full audio report, click here.