Gulke: How Farmers Are Fighting For Their Financial Destiny

October 1, 2016 05:08 AM
 
FJM_3530

One thing Jerry Gulke noticed as he pored over the September 30 USDA Grain Stocks report was the stocks in all positions portion of the report, which reflects the total of leftover stocks on August 30 that was still in farmers' hands.

Gulke, who farms in Illinois and North Dakota and also serves as president of the Gulke Group in Chicago, says total on-farm storage capacity is much higher than that.

“We can store on-farm about 12 billion bushels,” he says. “Factoring in current corn, soybeans and wheat stocks, that leaves you about 10 billion bushels to store something, plus available off-farm storage that's another 10 billlion bushels, more or less. That should put to rest concerns voiced by mainly the commercial firms that we won't be able to put away the 15 billion bushels of corn and 4 billion bushels of soybeans adequately and in a timely fashion."

That could make for a snug fit, but also consider that grains will also be moved out, and the export book during the next 30 to 90 days is huge, Gulke adds. The real question is whether inventories owned by farmers will indeed be sold off the combine, he says. Friday's rally in corn might have been a wake-up call.

"We could hold all of the ending stocks on our farms and have a big influence on the marketplace," Gulke says. "I think farmers are wising up to this. They're using on-farm storage a lot more efficiently."

Evidence of this – market harvest lows may be happening sooner in the season. The reason is farmers have become a lot smarter about holding more of their grain longer when prices are depressed, and ultimately get incentivized to sell it. Gulke says traditionally, the market would bottom out in late October or even November. Lately, that bottoming out has happened earlier in October, and this year, it might have already happened in late September.

Listen to Gulke's full report here:

Want more video news? Watch it on AgDay.

Gulke also looked closely at “disappearance” – or the amount of grain used up in the marketplace. These numbers are encouraging from a demand perspective, he says.

“We have used up even 300 million more bushels [of corn] this year than we did last year, and we’re not done yet,” he says. “We’ve got a big, big export program booked all the way through next March.”

Is it simply a case of “a rising tide lifting all ships?" Perhaps, Gulke says.

“Every country in the world is using a little more protein and a little more corn,” he says. “From an agricultural standpoint, there will be a day we won’t produce enough. We’ll get our day again, but we need to be ready for that.”

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Comments

 
Spell Check

Dayton
Saskatoon, HI
10/3/2016 10:28 AM
 

  I totally agree with Mark C. It's all about supply and demand. Choke off the supply and create demand. Very simple...

 
 
Hawkeyes
Iowa City , IA
10/2/2016 08:36 AM
 

  Are we supposed to tell our venders that we will pay our bill when corn gets to $8?

 
 
Hawkeyes
Iowa City , IA
10/2/2016 08:33 AM
 

  EVERY farmer has to sell crop to pay their bills/expenses. Are you an idiot?

 
 

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