Jerry Gulke: Are the Grain Markets Entering the Fear Stage?
Grain markets have a tendency to go through three stages: greed, hope and fear. With two weeks of lower prices, the markets could be headed to the fear stage, says Jerry Gulke, president of the Gulke Group.
July corn prices were down 19.25¢, while December corn prices were down 46.75¢, for the week ending June 25. July soybean prices were down 66¢, while November soybean prices were down 43.25¢. July wheat prices were down 27.25¢, and Minneapolis wheat prices were up 43.50¢.
“Markets go up and go down and they go this time, it looks like they're going down as fast as they went up,” Gulke says.
One issue weighing on the markets this week was the news that the U.S. Supreme Court issued a decision to overturn a 2020 appellate court ruling that said EPA could only grant waivers to refiners that had previously received them.
“So, we've been dealt a significant blow,” Gulke says.
Another key issue is the rain events happening across the Midwest.
“We know rain makes grain, but that's because rain begets rain,” he says. “Now we're looking ahead going into the next week and we have rain in the forecast, and if it materializes our fear of producing too much of everything could come true.”
On Wednesday, June 30, USDA will release its annual Acreage report and a quarterly Grain Stocks report. Based on the current debate, Gulke says it’s not so much of a question on if USDA increases its acreage estimate but by how much.
“That’s where the real dilemma lies,” he says. “I've seen it all the way from not much of an increase to half-a-million-acre increase of corn to 5 million more acres of corn. That's a huge difference. So, somebody is going to be surprised.”
Gulke is expecting around 94 million acres of corn and 88.9 million acres of soybeans.
“I've seen some estimates for less than that in soybeans,” he says. “So, in other words, they believe we switched beans out for corn. I know some people did that because of corn’s profitability in late April and early May.”
Gulke hopes USDA doesn’t raise yields, since that will put down pressure on prices.
“But that's a that's a distinct possibility,” he says. “I've got I've got the best chance for a record crop and probably I've seen in my lifetime just from unbelievably good planting conditions this spring.”
Read More
Jerry Gulke: What Are These Markets Trying to Tell Us?
Jerry Gulke: Rain Makes Grain, But It Didn’t Rain Everywhere
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Jerry Gulke farms in Illinois and North Dakota. He is president of Gulke Group. Disclaimer: There is substantial risk of loss in trading futures or options, and each investor and trader must consider whether this is a suitable investment. There is no guarantee the advice we give will result in profitable trades. Past performance is not indicative of future results.
