Jerry Gulke: The Best of Times, The Worst of Times
The grain markets posted some of their largest weekly gains ever this week.
May corn was up nearly $1 and December corn prices up 48¢, for the week ending March 4. May soybean prices were up 76¢, and November soybean prices were up 36¢.
While those gains are impressive, the wheat market is where we saw the major fireworks. Kansas City wheat prices were up around $3 for the week, Chicago wheat prices were up $3.50 and Minneapolis wheat prices were up close to $2.
“This week gave risk management a whole new meaning,” says Jerry Gulke, president of the Gulke Group. “This morning at 7:30, every Chicago wheat contract was limit up all the way to next March of 2023. I've never seen that happen before.”
The ongoing crisis in Ukraine is fueling these higher wheat prices—pushing them to at least a 14-year high.
“Ukraine and Russia supply the world with 25 to 35% of all the wheat,” Gulke says “If some of their exportable supplies disappear, some people will go without. And we've got anybody that's 18 years to 60 years old in Ukraine carrying a gun, so they're not planting the crops.”
In addition, Gulke notes, Russia supplies two-thirds of all the fertilizers exported to the world, which has global implications for planting spring season across the globe.
Livestock Implications of High Grain Prices
While the grain markets were dramatically higher this week, feeder cattle, live cattle and hog prices were all down several dollars for the week.
“As a grain producer, I like to know what the guy that's buying grain is making any money at it,” Gulke says. “Because if I get too expensive, then they can't make money and won't be a buyer down the road.”
The key moving forward, he says, will be if the livestock industry is seeing demand reduction or demand destruction.
“I remember one of our clients saying in the past that there's nothing you can do with $7 corn — you can't make ethanol of it, and you can’t feed it to an animal and make any money at it,” Gulke says.
WASDE on the Horizon
On Wednesday, March 9, USDA will release its monthly World Agricultural Supply and Demand Estimates (WASDE) and Crop Production reports.
Gulke says average trade guesses for the reports include:
- Corn ending stocks of 1.466 billion bushels, which would be down 74 million bushels from the February report.
- Soybean ending stocks of 279 million bushels, which would be down 46 million bushels from February.
- The Brazilian soybean crop near 129 million metric tons (MMT), down about 5 MMTs from its February projection
- Argentine soybean production near 43 MMTs, down 2 MMTs.
“Common sense says you have to lower the Brazilian crop 5 MMT,” Gulke says.
Read More
Jerry Gulke: 10 Thoughts on the Paradigm Shift in Global Agriculture
The Gulke Group conference is set for March 17-18 near Chicago. Speakers will cover weather, fertilizer and market outlooks, and special guest Dr. Mark Jekanowski, Chairman, WASDE, who just concluded the Annual Outlook Forum. If you’d like to attend, visit GulkeGroup.com for more information.
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 Advisory Services. 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.
