Jerry Gulke: Is Market Complacency A Friend or Foe?

02:35PM Nov 01, 2019
Jerry Gulke WMR 640x500
This switch to more positive prices is a nice change, says Jerry Gulke, especially on a start to a new month.
( AgWeb )

The grain markets posted a lackluster week. December corn was nearly 2¢ higher for the week ending, Nov. 1, while November soybeans were 4¢ higher and December wheat was nearly 3¢ lower.

“We had some negative rhetoric coming out from both sides of the tariff situation,” says Jerry Gulke, president of the Gulke Group. “That led the markets to retreat. But then on Thursday prices rallied up and closed near the highs.”  

This switch to more positive prices is a nice change, Gulke says, especially on a start to a new month.

“Prior to recently, it was like watching paint dry,” he says. “We need volatility to determine some trends. But prices this week turned out pretty good in spite of all things that were in the background.”

In the background, a key driver is the latest trade discussions with China. 

“What we’ve been fearing all along is China saying, ‘Yeah, I’ll buy a lot of grain, but we have to need it and you’ve got to be competitive,’” Gulke says. “It almost feels like nothing has changed at all.”  

Gulke recently started a new book about China. It’s called “The Hundred-Year Marathon” by Michael Pillsbury. He recommends it to anyone wanting to learn more about what the future could hold with the U.S. and China relationship, based on the past.

Harvest Slogs On

Another factor that’s ever present in the market’s scope this time of year is harvest progress. As of Oct. 27, USDA reports 41% of the nation’s corn crop has been harvested. That compares to a five-year average of 61% harvested by late October.

For soybeans, USDA reports 62% of the crop is harvested, which compares to a five-year average of 78%.

Gulke has finished harvesting his soybean crop. 

“We got into corn, but Mother Nature put a stop to that,” he says. “It'll probably be three or four days before the ground gets hard enough to drive a combine on it.”

The market, Gulke says, understands to some degree that farmers will eventually harvest this year’s crops. 

“It's kind of a complacency we saw in the marketplace,” he says. “Usually you'll see it in the charts first in the price action. Things will look bad or unimpressed, and suddenly you get a good market reaction. That tells you something's up that is more concerning than what the media might lead us to believe.  The current tariff resolution attempt (Phase I) and production uncertainties were well imbedded in the price action this past week.”

For example, Gulke says, corn has basically gone nowhere since mid-August. See the charts below.

corn prices

soybean prices

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Find more written and audio commentary from Gulke at