Gulke: Could Soybeans Slide Below $8?

August 29, 2015 05:00 AM

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.” 

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Spell Check

Southern, MN
8/29/2015 10:39 AM

  It's to bad that us farmers can't get all on the same page, what we should do is create our own shortage , don't plant then end rows then see what would happen . I think the stocks would disappear in a heart beat locking it up on the bins won't work because it's has been produced so if you don't produce it , its not out here , so how do we do that why let the government be our CEO they don't care about us , just the want big lobbyists money in the pockets, manufacturing and seed company they want to sell sell sell.

Mark C. Daggy
Humboldt, IA
8/30/2015 10:52 AM

  The spin needs to be ignored. If we shut off 100% of the supply until corn reaches $6, begin selling until it reaches $5 and again shut off 100% of the supply. We need someone in the bully-pulpit on the National Corn Board to persuade farmers to at least try the $6 to $5 cycle. At low interest rates, paying to hold corn, even for years, is just a cost of doing business. Shutting down the use of super seeds, genetic traits, massive fertilizer use and fence row to fence row planting only drives us into a perpetual cycle of depressed prices. I ask myself when there will be few enough farmers to totally control food prices in America? As stated in Revelations, when a quart of wheat will cost a man a days wages. With 48 million Americans eating free and the balance eating for an average of 7% to 8% of their income, the time has come to control food prices. The bull about feeding the world is so farmers over produce and the big grain buyers can make a killing exporting our sweat.

8/29/2015 08:10 PM

  I think too many focus so much on the supply side of the picture & not enough on the DEMAND side. Supply is influenced most by mother nature which is something farmers can't control or predict. Every spring farmers will plant every acre available & pray some areas get less than ideal weather which will bring higher prices. I think farmers should focus more on the demand side which is something they can TRY to do something about. Just 10 years ago ethanol was a minor part of the demand picture & now it's 5 billion bushels a year (part going back to the livestock producers). Farmers (through research groups) should spend more on research to find more uses for corn/beans/wheat/sorghum/cotton. It's just too difficult to ask farmers to reduce production. Who's going to plant & try to produce a smaller crop? Who's going to let their field set idle to reduce supply? Hedge funds, inaccurate USDA reports, analysts, etc... will push prices beyond where they should be but in the long run it will come down to supply/demand so change what you can & ignore what's out of your control.