Strong Market Closes Mark Uptrend

July 31, 2010 02:15 PM
 
“We have exciting stuff happening in grains,” says Jerry Gulke of the Gulke Group. “You almost have to see it on paper to believe it. I don’t remember when I’ve seen all commodities look this bullish at once.”
 
Gulke learned long ago that you can’t argue with the technicals—the charts often tell you something is going on in the markets that you can’t readily appreciate in the fundamentals. The charts for wheat, corn, soybeans, bean oil and maybe bean meal all are now long on both a weekly and monthly basis, he says. “This generally means we will see an upward bias for the next 12 to 18 months.”  
 
“It could be we are in about the same situation we were in 2008,” says Gulke. “Now, we need something catastrophic to happen to not be in a bull market.” 
 
Behind the rally may be the hot summer nights, he adds. “Illinois has had the most consecutive 80-degree or more days in history, and it’s not cooling off at night. We are hearing from Drew Lerner (Global Weather) and Elwynn Taylor (Iowa State University) that it is hot nights that corn really doesn’t like. And there’s a chance of hot, dry weather in August. Trim 5% yield potential and that is a 650-million-bushel loss—still a good crop, but we need a good crop.” (See Summer Top Producer “Market Strategy: The Game Has Changed,” for Gulke’s latest supply/demand analysis.)


 

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