Many areas of the country saw an extremely dry fall and the lack of rain has continued into the winter. Jerry Gulke, president of the Gulke Group, says he has clients from South Dakota and Minnesota who say they can’t remember it being this dry.
With all of the prevented planted acres due to the intense rains in many parts of the Corn Belt last year, Gulke says we have a potential of 9 million acres to go into production this year that weren’t in production last year.
"That is barring a big rain at springtime, but as dry as it is now, we can handle a lot of water."
So, where will these acres go?
"We think a lot of them will go to corn," he says. "If the weather is average, we have the opportunity to solve our undersupply and the prospect of running out of grain next year or the following year."
Implications for Prices
Gulke says this situation is causing a lot of downside risk. "I think the market will probably chop sideways, because there are so many uncertainties out there."
The bright side, he says, is that the low end of where a lot of people think prices may go is still at a level he wished for 10 years ago. "The new lows will be the old highs."
Markets don’t go up forever and they don’t go down forever, he says. "Now we’re in one of those bumble phases until we know more."
Listen in as Gulke provides his market outlook during the 2012 Top Producer Seminar.
See all of the news, photos, videos and more from the 2012 Top Producer Seminar in Chicago, Ill.