Gulke: January USDA Numbers Continue to Beat Up Grain Prices

 
Gulke: January USDA Numbers Continue to Beat Up Grain Prices

Big carryovers, strong dollar cause concern in the markets.

Two weeks after the USDA’s “friendly” crop reports, the grain markets are still suffering from the ripple effects of those final production numbers.

“I think the market looked at [the numbers] and said, ‘Well, demand looks pretty good and production dropped a little bit, but you’re still going to have 1.8 billion bushels of corn left and 410 million bushels of soybeans,” said Jerry Gulke, president of the Gulke Group and a farmer in Illinois. “What’s coming down the road? It can’t be bushels anymore. It can’t be acres anymore. What’s coming down the road to get that carryover down to 1.2 billion bushels of corn where you have much tighter supply? How are you going to get rid of 300 million bushels of beans to get these suckers back up to $14?”

If that sounds daunting to you, well, the market apparently agreed. “I think the market just sighed and said, ‘wow,’” Gulke said. “And then here comes the dollar.”

Listen to Gulke's full analysis here on Farm Journal Radio:

 

As the dollar has risen, of course, the competitiveness of U.S. exports has fallen. So have grain prices, with corn tumbling 40 cents. Given the pending time frame for crop insurance decisions and pricing, that worries Gulke. “You hope we’ve put in a bottom, but we’ve lost a lot of profitability.”

That troubles Gulke, given the pending time frame for crop insurance decisions and pricing. “You hope we’ve put in a bottom, but we’ve lost a lot of profitability,” he said.

What do you expect from the markets in January 2015 and beyond? Give your opinion on the AgWeb discussion boards.

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