Gulke: Corn and Wheat Hit 7-Month Highs, Signaling Paradigm Shift

February 11, 2017 06:00 AM
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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. 

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Spell Check

Eastern, NE
2/11/2017 02:33 PM

  Well as far as wheat goes, we still have $1.36 under KC for our crop. Need 76 cents before we even see $4.00 wheat. Another 75 cents to see $4.00 corn! An awful long way to go. Even if the CBOT jumps that much, our local basis will widen! Way too far to go yet for $4.00 anything! Too bad we couldn't raise marijuana here, bale it and send it to Colorado for sale!! LOL!!

bad axe, MI
2/11/2017 07:29 AM

  These traders all know that the banks are going to be pretty conservative on how much money there going to give out to put in this crop, so yields are going to be down. Look what they did to milk they pulled the lines of credit on some of the dairy producers in the fall, by by surplus . Same with corn and beans, little fertilizer, little crop.

Greensburg, IN
2/12/2017 11:57 AM

  So if Jerry so smart I find it funny he always tells us what he has done after the fact and his comments are always on the right side of the market but seldom shares his wisdom of what is coming. I betcha $10 he doesn't tell us when he will lift those calls but only how smart he was for having them on (after the fact). Fundamentally nothing has changed, but attitude perhaps may have. I still remain guarded and once price gets above break-even then I will act. 2.3 billion bushels of corn and 420 million bushels of beans projected to be left over is still our anchor. Let's us not loose site of those facts. Mother Nature is the only one change the course and that is still months away. Trump may play a longer term part of the equation but that is probably on the back end of 2017 crop. But nevertheless - thanks Jerry for the pep talk.


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