Gulke: Don’t Get Suckered Into the Field

June 20, 2015 06:00 AM
Gulke: Don’t Get Suckered Into the Field

Recent major rain events in states such as Missouri, Nebraska and Kansas have market analysts  questioning how many soybean acres will get planted. If speculation continues amid less-than-favorable weather, and soybean prices nudge higher, farmers should analyze their bottom line before re-entering the field, advises President Jerry Gulke of The Gulke Group.

“If the market gets concerned that we’re losing 4 million acres of soybeans to prevent plant, that’s extreme,” Gulke says during an interview with Weekend Market Report host Pam Fretwell. “But if it does, it’s going to try to give us a reward to say, ‘Jerry, stay in the field. I’m going to give you another dollar. We got 50 cents [off the lows] already. I’ll give you 50 cents more than I would have two weeks ago if you’ll just stay in the field and plant the soybeans.’

He continues: “Then you multiply what I would have got at 50 bushels versus what I might get at 35, and will the market reward me? … They’ll sucker the guy into saying, ‘Well, I’d better plant them because the low’s in.’ We just don’t need to see the farmers go back into the field and take a risk here. I think if they looked  at their prevent plant payment and can come out of this with any kind of a breakeven or a net gain and not have the expense, that ought to be a consideration because the risk is still there.”

Farmers should also keep in mind the fact that USDA’s June 30 reports will reflect planting intentions, not the wet-weather reality seen in some Corn Belt states. At the same time, many producers in Iowa and Illinois completed planting, so key data points will be revealing.

“That intentions in Iowa will be pretty important,” Gulke explains. “If we show less corn and more soybeans in Iowa than we said we were going to do in March, that says the cost-price squeeze had an effect.”

In states where farmers are rained out, only time will reveal the size of the U.S. corn and soybean crops.

“We’ve probably put the highs in expectations for both production of corn and soybeans behind us for the year,” Gulke notes. “It’s just a matter of how much did we lose or are going to lose, and we aren’t into July and August weather yet, for soybeans for sure.”

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Spell Check

Western, NE
6/21/2015 01:01 PM

  And what will those idled acres be planted to in the fall? I foresee a lot of winter wheat in the ground come September and October. The trade does entice the farmer with a few bucks more to try and plant the acres, but in reality, will crash the market when those acres finally do get planted. Without hedging those acres, you could be SOL when it comes time to sell those beans. I actually have to agree with Gulke and write that you must sharpen your pencil to see if it is going to be worth the lost yield and added expense to put in those late beans!

Greensburg, IN
6/22/2015 12:51 PM

  So it shaping up to be another "Crap Shoot" of trying to nail down planted acres (different location) and what 10 inches of rain did to/or/for the crops. Something tells me Jerry will be talking about acres all the way to the Jan report as he will compare how big a discrepancy there is between USDA & FSA...

sw, KS
6/23/2015 03:14 PM

  There's the American farmer's spirit, "let's not farm, but sit in our office and fill out insurance papers and complain about how hard farming is because of mother nature!


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