Cheaper energy sounds good, but falling prices aren’t so great for ranchers and farmers.
With oil supplies rising and gasoline prices sinking to a national average of $2.038 per gallon, it’s downright enjoyable to fill up your truck these days. “Gasoline is dropping like a rock—straight down,” said Jerry Gulke, president of the Gulke Group and a farmer in Illinois. “That means we have more money in our pockets.”
Unfortunately for farmers and ranchers, though, the grain and livestock markets are nowhere near as cooperative these days. While corn rallied slightly on Friday, it still ended the day under $4 for March and May futures. Soybeans slipped roughly 4 cents on futures, finishing at $9.794 for May beans. Wheat too, dropped, closing at $5.326 for May futures.
“We have to be careful here—these are cheap prices,” said Gulke, speaking to Farm Journal Radio’s Pam Fretwell on Friday. “We’re putting a world of hurt onto producers …. There are a majority of people there for whom $4, $4.10 doesn’t work well.”
Listen to Gulke's full analysis here on Farm Journal Radio:
He’s especially concerned about falling prices given the approaching crop insurance deadlines. “We don’t need any further bad news on demand as we move into this February time frame for determining insurance,” Gulke said.
He also cautioned hog farmers and cattle ranchers to be thoughtful in their marketing decisions.
“The market is anticipating a loss of demand because of high-priced beef,” said Gulke, who also noted rising pork production. “We may have a lot more hogs coming to market in the future than we think, and that’s what the market is trying to figure out. … The money guys are pushing money around and making a lot of statements, and none of them are very good.”
What do you expect from the markets in January 2015 and beyond? Give your opinion on the AgWeb discussion boards.