Gulke: We're the Best in the World, and We're Proving It

March 7, 2015 05:16 AM
 
Gulke: We're the Best in the World, and We're Proving It

Despite a wild week in the grain markets, Jerry Gulke says there's still reasons to be hopeful about our economy.

It’s been a down week for the grain markets, with soybeans and wheat both taking hard hits. The soybean market broke its sideways trading range by posting a key reversal down, despite initial support from a trucking strike in Brazil.

Wheat fared no better, dipping to new lows in light of a rising U.S. dollar that raised concerns about its competitiveness on the global market.

“When you have too much, wheat gets priced as a feed grain; when you don’t have enough, it gets priced as a food grain, and right now it’s going to have to compete with corn,” on the feed market, says Jerry Gulke, president of The Gulke Group.

But despite the down market, Gulke remains optimistic about the country’s economy. A government report released Friday pegged the unemployment rate at 5.5%, with U.S. employers adding 295,000 jobs—a 12th straight monthly gain above 200,000.

 “I just have rose-colored glasses on when it comes to our ability to do things,” Gulke says. “We’re the best economy and the best country in the world, and we’re proving that now, even coming out of bad times.”

In short, more consumers have money in their pockets, and more people are looking for jobs.

“That bodes well for our overall economy,” Gulke explains, “and while agriculture is taking a set back, the jury’s still out yet on how bad it might get. But certainly, there are cash flow problems coming at these prices.

“What’s concerning to me is that there are a lot of farmers out there who still have last year’s grain left, and they’re going to plant more of it…. Let’s just hope we don’t produce ourselves into a big ending stocks problem that we can’t come out of in one year.”

Listen to Gulke's full analysis:


Rising Dollar

Even though the wheat market was hurt by the dollar’s increasing value, exports remained strong this week, with soybean sales above the five-year average. But, Gulke says, freight rates have been exceptionally low, and combined with low prices, that’s kept the U.S. competitive. The question is, how long will it last?

“I’ve been concerned about the rising dollar—others have, too—and we’ve not necessarily seen (the impact) yet. Maybe that day is coming,” Gulke says.  

“If you look at the dollar historically…we aren’t even half recovered from the total collapse from 2001. We’ve got some room to rally the dollar yet. That concerns me, that could give us some fits. We’ve got to be the lowest cost producer in the world, including some effects from the dollar.”

 

USDA Reports

Gulke says he doesn’t expect too much excitement to come out of the March 10 WASDE and Crop Production reports. Rather, he’s looking ahead to the March 31 Prospective Plantings report.

The crop to watch this year: Corn.

Gulke says he expects farmers who had successful crops last year will plant the grain again this year, particularly southern growers. His concern is whether farmers in the fringe states—and even the major corn states—will follow suit.

“We dare not plant as much corn as we did last year, and the sooner we realize that, the better,” Gulke says.

He’s not as concerned about soybean acres.

“A million acres more or less in beans won’t make much difference,” he explains. “There’s too many, so you might as well have too, too many and have not quite enough  corn and maybe hold one commodity up.

“Hopefully, we’ll keep treading water here to where spring planting weather will be more important than perhaps it might’ve been otherwise.”

 

 

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Comments

 
Spell Check

Dieter Harle
Bettendorf, IA
3/7/2015 10:29 AM
 

  This statement in Mr. Gulke's letter: "We’ve got to be the lowest cost producer in the world, including some effects from the dollar.” No longer can we make those claims that the US is the BEST or most economical crop producer. (we keep telling this ourselves.....) There is lots of data that supports this. Most important issue of our ever decreasing competitiveness in the world is the way we "think" that our system is the "BEST". For instance GMO technology while great and good is nothing more than "purchased truth" at this time. Only unbiased research will lead us out of this mess that has been created. Besides, it would be great for farmers to start reading what has already been produced by non-GMO community world wide. This info is not sponsored by the majors but readily available in peer reviewed articles. Just ask if you cannot find it....a very concerned Farmer-at-Heart and Mind and Grand Father

 
 
Craig
Kearney, NE
3/7/2015 06:32 AM
 

  We are the reserve currency of the world Jerry. That gives us opportunities and freedoms that other countries don't have. Our states are also are tied together as a union, we don't just share a common currency like the EU. Those are our advantages. If we were to lose status as reserve currency, we would lose our biggest advantage overnight. Our country has more than its share of problems too.

 
 
Jim Martindale
Ossian, IN
3/7/2015 08:08 AM
 

  Jerry, I don't see your reasons for optimism as reality based. The fact is the list of GMO rejecting importing nations continues to grow. It's even getting traction in the US as well despite the big money pharma applying lots of bucks and fearmongering tactics. Our wheat is even now being rejected because of GM contamination and our own people in increasing numbers can't eat it because of the increasing allergenicity to the stuff made from it. Reliable sources have told me that MN has a big DON problem in spite of producing a crop that appeared outwardly to be scab-free. How do you find optimism in our greatness quotient ? You don't really believe the 5% unemployment numbers do you? It is reported there is another 15% of the population that has been of work so long they are no longer report as unemployed.

 
 

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