Corn and wheat prices climbed this week to highs not seen since the summer of 2016, suggesting commodity markets are undergoing a paradigm shift, says Jerry Gulke, president of the Gulke Group.
“We’re now seeing corn and wheat breaking out into highs not seen since July, which was the period of time before we knew we had record crops in the field,” Gulke tells “Weekend Market Report” host Pam Fretwell. “We’ve absorbed all of that negative news, and price is now better than it has been in seven months.”
For months, observers have suggested many farmers will begin selling corn at or above $4. That milestone nearly arrived this week, Gulke says.
“We broke well above that $3.70 level for March and we closed for the week 8 cents to 9 cents higher, old crop 6 cents higher. The old crop’s near $4 at $3.99 ½,” Gulke says. “Conventional wisdom would say, boy, give these farmers a chance at $4 futures. We always hear $4—to me that’s cash, not futures—but for some people in the northern Plains with 65- to 75-cents-under-basis corn, that’s a long ways away from $4 cash. But to central Illinois, that brings probably some corn back into the mix. Basis is even there. Some guys in the South are plus 10 cents, plus 20 cents, so outside of the northern Plains, you have probably close to $4 corn or within 25 cents of it.”
Especially noteworthy is that these corn prices broke above January highs, Gulke says, and January prices broke above December highs. Now the question becomes whether corn and wheat prices can sustain their trajectory.
“Wheat managed to close back above that $4.70 level in July, which has been hard to penetrate. We haven’t been above that level since last July,” Gulke explains. “All of these grains are breaking out to the upside. At least they sustained the weekly close. You’d like to see two weeks in a row to really give you confidence that this is a new trend. But I think it’s enough to get a lot of people that are short out. … For the last 18 months, wheat’s been the weak sister. … Now all of that is turning at a time when you’re going into these critical areas for dormancy and that kind of thing. Technically, it’s very good.”
Soybeans haven’t surpassed January highs. Consequently, it’s feasible more farmers could be thinking about adding more corn back into their spring crop mix.
“It’s up in the air” as far as what USDA’s Planting Intentions report will say in March, Gulke says.