Jerry Gulke: Do the Negatives Outweigh the Positives in Grain Price Outlook?
Prices are flat to lower this week, with March corn prices up a penny, and March soybean prices down 21¢ for the week ending Jan. 20. Wheat prices were down a few cents.
While the market moves seem a bit muted, Jerry Gulke, president of Gulke Group, encourages farmers to take a longer view.
“In soybeans, we’re 73¢ off the highs of Jan. 3,” he says. “We traded higher and traded lower on the week and closed pretty much near the lows. In fact, we missed not having a weekly key reversal down in March beans, which is the lead contract, by an eyelash going into a weekend.”
The market volatility is being influenced heavily by South American weather, Gulke says.
“It better not rain more than we expect in Argentina, as it already has rained some,” he says. “The concern of the market is not so much how bad it is in Argentina, but how bad it is not. You get to a point where you stop deteriorating a crop.”
Gulke says it’s time to reflect on what we know now versus Jan. 1. Issues such as the threat of a recession, South American weather, the Jan. 12 crop reports and the selling following it, a smaller U.S. cattle herd and declining ethanol production.
“I can give you one good reason why soybeans should have gone higher after Jan. 1, and I can give you probably 15 different reasons why I'm really concerned about agriculture going forward,” he says.
One key factor he’s watching is stocks of major agricultural equipment brands, which have declined.
“Somebody must not feel they want to be involved in agriculture in in any way in what the market feels like the deflationary economy,” Gulke says. “We have a lot of things that have changed from last year to this year and it has me concerned.”
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Jerry Gulke farms in Illinois and North Dakota. He is president of Gulke Group Advisory Services.
Learn more at GulkeGroup.com
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