Gulke Talks Winners and Losers

Gulke Talks Winners and Losers

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.

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Spell Check

Greensburg, IN
1/26/2015 10:34 AM

  Not sure where the winners line up...but I do know if prices remain at current levels or lower there's going to be a lot more losers. Built equity last 5 years, now looks like we are going to give some back. Even with a .50 ct rally in new corn & $1.00 in new beans barely pay the bills. Can't expect yield to bale us out for the 3rd in a row in Indiana. Time to tighten the belt on spending, projects put on hold, and pray we get an opportunity to sell at or above break-even.

Western, NE
1/24/2015 09:00 AM

  Again, who is in control? The speculative funds. The 2014 farm bill is a joke and will not produce a 2014 payment to anyone. The prices are going to hover around the "reference" price for the next five years and put a chunk of farmers in financial peril. I am glad that for a change the "what is my payment" mentality may give way to "what is my debt load." If we have an interest rate increase, that debt load is going to be more important than ever as land prices will come down precipitously and potentially hurt the market based financial statement! The FED hosed our economy. We're now sitting on the precipice of an agricultural depression. Low fuel prices will help for now, but unless the other input and capital costs come down in snyc with the commodity prices, it won't be but a couple of years before our balance sheets look like they did in the eighties.

central, NE
1/24/2015 03:58 PM

  with cash rent where its at and all thecosts to put this years crop in it ooks like its better to just let all rented ground go and just sit in the house all year...will lose less money..most bankers are saying time to let rented land go...IF you cant make it work on paper then why would you work all year to lose money..heard lots of lad for rent already...could really be a lot by march 1


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