Amid low commodity prices and struggles in South American countries, President Jerry Gulke of The Gulke Group says China might make plans to buy more U.S. soybeans.
“Do you really trust Argentina and Brazil and some third-world country that’s falling apart at the seams to honor their contracts and be able to deliver like they should?” Gulke tells “Top Producer Podcast” host Pam Fretwell in an exclusive report airing later this month.
“We need to eat soybeans every month around the world, and certainly in China. It was one thing at $14 soybeans and $7 corn. I’m going to go look for a 10% reduction from currencies. But when we get down here to $8.50 soybeans and $3.50 corn, the price is pretty cheap for that commodity. You can afford to pay a premium per se, it isn’t very much, and even though we’re competitive, they may come to us anyway.
“ That’s what we need to watch for,” he continues. There’s a point where you pay for quality, you’ll pay for assurance that it’s going to be met in a timely fashion.”
NEW! Bookmark the new Top Producer Podcast and listen each Wednesday for the latest business news and advice from the editorial team of Top Producer magazine. Our debut segment—available for listening now—features Aaron Johnson, COO of Farm Credit Illinois, who applies 1980s business lessons to today's environment.
Since the dollar saw highs in March and April, its value largely has moved sideways.
“The price action kind of dictates this thing is looking a little weaker than what it has in the past,” Gulke explains. “That’s what we need to change the relationship between Brazil and the U.S. I think a lot of people have been watching the interest-rate discussion. Are we going to raise rates this year, or aren’t we going to raise them? Some say we can, and some say we can’t. I think the dollar has built in the presumption that there will be an increase in interest rates. That’s usually bullish for the dollar because you get more money in interest rates on that dollar, even though it still isn’t very much.”
Those factors suggest the dollar’s value will trend lower through the end of the year.
Click the play button to hear our debut episode of "Top Producer Podcast" featuring Aaron Johnson, COO of Farm Credit Illinois. He applies business lessons from the 1980s to today's ag business environment: