Jerry Gulke: Markets Mark Time With A Negative Bias

02:47PM Nov 15, 2019
Jerry Gulke WMR 640x500
The negative tone in the markets is due to a lack of movement in the Chinese trade negotiations, says Jerry Gulke, president of the Gulke Group.
( AgWeb )

The grain markets ended the week on a negative note. December corn was down 6¢, January beans were down nearly 13¢ and December wheat was down nearly 8¢ for the week ending Nov. 15.

The negative tone in the markets is due to a lack of movement in the Chinese trade negotiations, says Jerry Gulke, president of the Gulke Group.

“The market has been wanting to see a document signed and in place,” he says. “I’m getting more of a sense that we are in a losing proposition with the Chinese trade deal. We've been 18 months going at this.”

The Phase 1 deal sounded wonderful, Gulke says. 

“China said they were going to buy $40 billion to $60 billion worth of stuff, but then China comes back and says, ‘Well, we may do that, but only if the price is right and if we need it,’” he says. “So, we’re just in a stalemate.”

In the meantime, China continues to buy small amounts of soybeans. Gulke expects the country to keep doing so until South America harvests their next crop of soybeans. 

“It will be a lot more difficult to get a deal made because then they don't need to buy beans from us for a while,” Gulke says. “I'm a little concerned that because here we are harvesting the second crop now after the tariffs, and we have to find a home for it regardless of where it is and what condition its in.”

Harvest Slogs On

As of Nov. 10, USDA estimates 66% of the U.S. corn crop has been harvested. That compares to a five-year average of 85% harvested by the middle of November. For soybeans, 85% of the U.S. crop has been harvested, which is behind the five-year average of 92%.

Gulke is harvesting corn this week in northern Illinois. 

“I have to say, the crop is better than I thought it would be,” he says. “It’s not yielding as good as last year, but still respectable. It’s running around 23% moisture, but 15 days ago it was 28%. So it is drying down in this cold weather.”

Because of low test weights and lower yields, Gulke does think there will be a reduction in the national average corn yield. “But we probably won’t really know until it’s too late,” he says.

 

Read More

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Jerry Gulke: Is USDA Methodology Archaic?

Jerry Gulke: Volatility = Profit Enhancement Opportunities

Find more written and audio commentary from Gulke at AgWeb.com/Gulke