When soybeans slipped 20 cents earlier this week, many started to wonder if the market had finally had enough of this spring’s rising soybean prices.
“We had a pretty significant pullback in the beans the other day that got a lot of people nervous,” said Jerry Gulke, president of the Gulke Group and a farmer in Illinois, speaking with Farm Journal Radio’s Pam Fretwell. “But we’re up more than $2 since the first of March.”
And by Friday, prices had improved, with corn closing between 2 and 4 cents higher for July through December futures and soybeans gaining a few pennies for July and August contracts.
“We pulled higher in corn and beans for the week,” Gulke said, urging farmers to look at the big picture trends that have emerged this spring. “If you’re concerned and nervous about the volatility (during the week), then you have to say, ‘Let’s look at a weekly chart and a monthly chart’ and just see what we’ve done in the last three months.”
For growers who have hoped for higher prices for so long, it’s a much improved picture. “You have to be pretty encouraged,” Gulke said.
Will such upward movements continue? That may depend on the weather and what it brings to the heart and fringes of the Corn Belt this summer, although Gulke doesn’t think we’ve entered a weather market just yet.
But Mother Nature and her impacts on production will be closely watched this year, as many wonder when and where El Nino will transform into La Nina.
“With the focus on soybean production globally being less than total usage, you can’t afford even North Dakota to have a crop problem,” said Gulke, who believes end users are already getting a little bit nervous about fulfilling their future soybean needs.
“You get guys saying, ‘I don’t know what’s going to happen, so I need to buy some soybeans now,’” which means old-crop sales, according to Gulke.
“That’s not something that a lot of traders thought would happen. But Friday you saw July soybeans up 10 and November soybeans down 10, which like (the market) saying, ‘I need to get my hands on the quantity of soybeans that I know have already been harvested and are sitting in the farmer’s hands. What is it going to take to get (those soybeans) out of his hands?”
Given all these factors, Gulke said farmers need to expect continued volatility in the markets.
Listen to Gulke’s full comments here, including his thoughts on the weather forecast for the growing season.
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