Gulke: Corn Scores 'Small Victory' with 5-Cent Price Jump

November 19, 2016 05:21 AM

Even though monitoring grain prices has been like watching paint dry lately, don’t take your eyes off of the board because a sudden change in fundamentals could spur movement, says Jerry Gulke, president, the Gulke Group.

Lately, monitoring grain prices has been about as exciting as watching paint dry, says Jerry Gulke, president, the Gulke Group. Still, corn prices scored a “small victory” this week with a 5-cent jump.

“Corn is up about a nickel across the board in the futures, and soybeans are up about a dime,” says Gulke, speaking Friday, Nov. 18, to host Pam Fretwell for the Weekend Market Report on “Meal was up and soybean oil wasn’t up, but it wasn’t down. That’s a major victory with what happened in palm oil a couple of weeks ago that had a major reversal.”

Even though prices have been slow to move in any direction, Gulke advises keeping an eye on them because a change in fundamentals can spur movement in the markets.

“It’s kind of boring, but about the time you take your eyes off, it moves a little and then you wonder what’s going on now,” Gulke says. “It can lull a person to sleep till all of a sudden a nickel is a big move. We forget that we used to move that much in the first half-hour [of the market open] in corn, and soybeans used to have a 30- or 40-cent move.”

Part of the slow price action can be attributed to the big crop. Piles of grain are on the ground throughout the U.S., and basis is widening in places as elevators and ethanol plants fill to capacity.

At the same time, demand is good and the U.S. will remain the dominant seller of corn and soybeans in the world, at least for the next several months.

“I think one of the things that is helping our market is the fact that there’s not a lot available in South America, the soybeans especially and corn, of course, with their bad crop last year. We have that market. They’re going to come to the U.S. We’re going to be a supplier through March, regardless of the cost.”

Gulke expects the U.S. to continue shipping significant volumes of soybeans out of the country and to eventually switch to corn. Some of the buying happening now can probably be attributed to fears over changes under the administration of President-elect Donald Trump, he says.

“I know in Mexico, there was talk that they were front-end loading,” Gulke says. “In other words, they were scared if maybe [President-elect Donald Trump] did get elected, that means bad news because the dollar goes up and peso goes down, and it’s going to be more expensive, and he might shut [them] off because of immigration and also NAFTA and those kinds of things being talked about, trade being renegotiated. We may have had people out there buying a little bit more now than what they would have otherwise.”

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