Jerry Gulke, president of the Gulke Group in Chicago, thinks soybean prices are in dangerous territory right now.
“Unlike corn, which has not taken out last fall’s low, soybeans closed this week at the lowest level since they’ve been since 2009,” said Gulke, speaking Friday to Pam Fretwell on Farm Journal Radio. “That’s not good. We’re in the $8 vicinity. There were a lot of people talking last year that soybeans could go to $7.50 and now we’re hearing the same thing again. And now we’re down to an area where you don’t know how low is low enough.”
Prices for November soybean futures closed at $8.854 on Friday afternoon after closing as low as $8.65 on August 26.
Those are some uncomfortable numbers. “We know that’s below the cost of production for some people—maybe a lot of people. We’ve got calls from guys saying, ‘Why would we even think of selling below the cost of production? Doesn’t the market know we can’t produce soybeans for that?’” Gulke said. “The market has never cared what my cost of production is. At times of surplus, they will always try to take things down to the lowest-cost producer and lowest-cost seller, and right now that’s South America.”
Listen to Jerry Gulke's full comments here:
There still are a few unknowns about the corn situation. The market is still uncertain about the size of the U.S. corn crop, given the spread between USDA’s estimate and the recent Pro Farmer Midwest Crop Tour results. The economic situation in China might lead USDA to adjust exports downward. And while soybean prices are below last fall’s low, corn prices are still 60 cents above the 2014 harvest low.
“We’re in the middle, waiting for new information that should come in the September crop report and maybe not even (enough) to satisfy the market until October,” Gulke said. If personal sales are insufficient currently, then "we might as well wait it out until the September USDA report on the 11th.”