Gulke: Rally in Dollar Raises Uncertainty in Ag Markets

October 24, 2015 05:00 AM
Gulke: Rally in Dollar Raises Uncertainty in Ag Markets

The sharp rally in the dollar index this week is causing more uncertainty for ag commodity exports and markets, Jerry Gulke, president of The Gulke Group, said in Friday’s broadcast of Weekend Market Report.

“We get through with weather, and now we have to be financial experts in order to manage this market,” he said.  

The U.S. dollar index rallied sharply on Thursday and Friday to end the week at 97.03, which is the highest close since mid-August. A year ago, the U.S. dollar index was valued at 85.70.

“It doesn’t bode well for us, but it says that it will cost them more of their currency to buy the dollars to buy our grains,” Gulke explained.

The CME December corn contract finished 3 cents higher on the week at $3.79¾ per bu., November soybeans were 2¾ cents lower at $8.95½ per bu., and Chicago wheat’s December contract was down 1¾ cents for the week at $4.90½ per bu.

The rally in the dollar index this week followed comments made by the president of the European Central Bank on Thursday who hinted at cheapening the value of the euro to help boost European exports and grow the European economy, Gulke said, which sparked fears of a global currency war unfolding.

The president’s comments, Gulke noted, were in response to the U.S. Federal Reserve’s decision to not raise interest rates in September, which threw a curve ball into the European Central Bank’s plans since the European bank had anticipated the Fed to raise rates.

“That’s what turned this market around – that market anticipation that we’re into a currency war between the people that determine the money supply and interest rates, and that just puts a lot of uncertainty into it,” Gulke said.

Listen to his full comments here:

“I don’t know if we want to play that game with the rest of the world to see who can get the cheapest currency,” Gulke said. “But it looks like that’s back on track again.”

The sharp rally in the dollar dampens hopes for a post-harvest rally in the wheat, soybean, corn cattle and hog markets, he said, as those commodities become less competitive on the export market. 

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Spell Check

Mark C. Daggy
Humboldt, IA
10/24/2015 08:21 AM

  Hard to believe, that the US "butt wipe dollar", is actually considered more valuable each day, as Obama continues to pump out money from the Fed? Just like Fannie Mae and Freddie Mac, America is not too big to fail. All is nothing more than a Ponzi scheme, to give the masses a sense of security and well-being. When in reality, the financial cliff we will fall from is just getting higher. The collapse is coming and much like musical chairs....many will not find a seat when it does.

Kearney, NE
10/24/2015 07:29 AM

  "sparked fears of a global currency war" Where have you been Jerry? This is exactly what has been going on every where since 2008. When you print money, you are attempting to drive the value of your currency down. Every major Central Bank has done this. Unfortunately for our exports, we are perceived to be the strongest economy-having the reserve currency does that-and the value of our dollar rises as other countries beggar their currencies. All countries want to export their way out of this mess. Only we think that we can import our way out of it-and we just concluded another one sided trade agreement(TPP) that will do just that for us. What a pathetic bunch our trade "negotiators" and "leading" Ag groups are. They have just sold producers out-again! Without currency protections built into trade agreements, the U.S. will always lose. Every trade agreement passed so far has proven this.

Clarendon, TX
10/24/2015 08:44 AM

  From a farmers viewpoint, I am getting sick and tired of our government setting our commodity prices through exports, imports and trade agreements. The 2014 farm bill is a joke and will not help as all this comes down the tunnel. We deal with floods, drought, wind, insects, storms, and of course the government. Pathetic.


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