The corn, soybean and wheat crops are damaged beyond repair in parts of the Corn Belt. That has some farmers selling on a weather-induced rally. But President Jerry Gulke of The Gulke Group isn’t making any sales just yet.
“You see farmers selling, and the market is as if it doesn’t even exist, it doubles it up and then some. Somebody has to sell,” Gulke tells “Weekend Market Report” radio host Pam Fretwell. “They’ll let the guy that’s short out once he wants to get out. They kind of helped the speculators get out gracefully, and then they kind of disappeared. Now farmers are holding, and I suspect they’ll hold a little longer. Because now it becomes very suspect as to what kind of crop in total we have.”
In fact, it appears the market has priced in about a 250 million bushel drop in production because of less yield and lost acres, he adds. The market appears to be trading on a 1.5 billion bushel carryover.
“I can go to South Dakota and North Dakota and find some of the best crops you’ve had in a while, and I can go 30 miles south of me and find out that there’s land underwater,” Gulke says. “Overall, we have irreparable damage to both crops, corn and soybeans, and now probably wheat. Wheat’s up 30 cents today [Friday, June 26], that was the dog of the whole bunch. Irreparable damage is done, and what the market has to do is try to discover a price that’s commensurate with what the new supply is based upon the demand that’s out there.”
He advises farmers to review market charts from recent months and await additional data before reacting.
“I think it’s worth waiting and seeing because we blew through some resistance level,” Gulke says. “I think what producers need to look at, and their brokers will tell them as well, we had resistance at $4 a few months ago. We need to look back at the charts … . I’m as technically minded as anybody, but there was a reason why a particular price was printed on that chart one month ago, two months ago, three months ago. We had downward trends in these grains and oilseeds based on some fundamental things everybody perceived. We [were] going to have a glut of stuff.
“In my mind, anything that was printed before the first of May or maybe the first of June, even, may be worthless,” Gulke continues. “Because we have a total set of different fundamentals that determine that price. It’s time that maybe we sit back a little longer and wait for some of these reports that are coming up to see what they say. The market is not getting bigger on the supply. It may take us until next January to find out exactly how much corn and soybeans we have.”