When it comes to corn supplies, the market seems relatively unconcerned, given Friday’s December ’16 futures prices of $3.84.
“If we get a good crop and average yields, then we’ve got enough,” said Jerry Gulke, president of the Gulke Group, speaking to Farm Journal Radio’s Pam Fretwell. “Whether we’ve got 2.5 billion bushels (of carryover) or 1.6 billion bushels, you’re going to need a pretty good reduction in production—5 or 6 bushels an acre—to really get things to tighten up and justify corn over $4 consistently.”
That’s not the case in the soybean market, thanks to waterlogged bean crops in Argentina and a drought in Brazil.
“In beans, it’s a different story,” said Gulke, who farms in Illinois. “We had a cushion in there. We’ve taken that cushion away, and the market is acting like it wants to buy every available acre.”
With worries about soybean crop quality and production in South America, bean prices have been soaring, climbing 22 cents on Friday to close at $10.34 for July ’16 futures and $10.22 for November ’16 futures. As recently as March, July soybean futures were hovering in the $8.60s.
As concerns about the crop rose, so did prices. “The market said, ‘We need to buy some bean acres to makes sure that, if there’s a crop problem, we have enough’ soybeans, Gulke said.
Fears of a crop problem continue to loom over the market as weather forecasters suggest El Nino—and its influence on good growing conditions for the Midwest—is nearing the end of its cycle.
“We got to watch (for weather issues) this year,” Gulke said. “All areas are not going to have a good crop this year.”
Listen to his full comments below.
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