Jerry Gulke: Are There More Questions than Answers in the Grain Markets?
The soybean market posted huge moves this week.
“Exciting times I think are not behind us yet,” says Jerry Gulke, president of the Gulke Group. “Price volatility is going to be extreme from one week to another.”
March corn prices were down 14.5¢ and new-crop December corn prices were up 4.5¢, for the week ending Feb. 4. March soybean prices were up 86.50¢, and November soybean prices were up 45.5¢. March wheat prices were down 21¢.
In the soybean complex, meal posted the largest move up. Production issues in South America due to dry and hot weather is pushing those prices up, Gulke says.
“You are going to have to come to United States for some of that meal and we can't supply all that meal that Argentina normally does, mainly because we've got logistics problems,” he says. “Meal is becoming the leader in what's going to determine the price of beans — it is a very impressive situation.”
The corn market is being impact by Chinese demand.
“China came out on Thursday’s export sales report and canceled some corn, but then also bought some corn,” Gulke says. “I think that confused the market.”
Acreage Battle Questions
With higher soybean prices, will more growers stray away from corn? It’s unlikely, Gulke says, as many farmers have made up their minds and are facing strong profit potential.
“No matter which crop you plant, you’ll likely made a profit at these levels,” he says. “I think the larger farmers gravitate more towards a rotational plan. I'm guessing two-thirds of the farmers are pretty content with where they're at with their crop mix.”
Gulke also believes crop insurance levels will have a big influence this year on the corn-or-soybean decisions.
Global Tensions
Russia and China issued a joint statement on Friday that called for NATO to halt its expansion, while Moscow said it fully supported Beijing’s One-China policy toward Taiwan, following a meeting between presidents Vladimir Putin and Xi Jinping.
The two countries expressed concern about “the advancement of U.S. plans to develop global missile defense and deploy its elements in various regions of the world, combined with capacity building of high-precision non-nuclear weapons for disarming strikes and other strategic objectives.”
“One country has got a lot of energy, Russia, which the other country needs,” Gulke says. “And China has a lot more economic viability or money to support Russia. Inflation and eco-political situations are all part of the mix. It will be a very interesting outcome.”
USDA Report on the Horizon
USDA will release its monthly World Agricultural Supply and Demand Estimates (WASDE) and Crop Production reports on Wednesday, Feb. 9.
“I expect to see USDA lower South American production numbers again,” Gulke says. “What we hope to see is USDA verify we will gain soybean and corn export business yet this marketing year. We want to see the world buying from us.”
Check the latest market prices in AgWeb's Commodity Markets Center.
Get in Touch with Jerry
Do you have questions for Jerry? Contact him at info@gulkegroup.com or 312-896-2090 or GulkeGroup.com
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.
