Jerry Gulke: Global Events Rattle Grain Markets
A week ago, Jerry Gulke discussed how global events could affect agriculture. Now we know.
“We found out just how rattled markets can get,” says Gulke, president of the Gulke Group.
May corn was up 3¢ and December corn prices were down 18¢, for the week ending Feb. 25. May soybean prices were down 19¢, and November soybean prices were down 48.75¢. May wheat prices were up 55.75¢.
USDA held their annual Agricultural Outlook Forum this week. For 2022, their early acreage estimates include:
- Corn: 92 million acres
- Soybean: 88 million acres
- Wheat: 48 million acres
“We have to realize these are not survey-based estimates—those will come March 31,” Gulke says. “These are based on economic models historically used by USDA, likely as of prices a couple months ago. It's interesting that there isn't much of a change from last year.”
He says we will need more than 88 million acres of soybean to meet global demand due to South America’s crop shortfall.
We are going to not run out of soybeans, USDA indicates.
“But how we get there is still in question,” Gulke says. “Will we do that with $17 or higher soybeans curbing demand? It seems someone or lots of people will use less.”
The financial and commodity markets reacted strongly to word that Russian President Vladimir Putin had launched military action in Ukraine earlier this week.
This caused end users, importers and exporters to scramble to cover their new price/logistics financial risk, Gulke says.
“This will significantly change the global flow of grain,” he says. “Ukraine produces a lot of corn and a lot of wheat. The ramifications of this will not go away anytime soon. We're going to have to deal with Russia, and, of course, they are tied to the hip of China because of their 5000-word agreement.”
In addition, China is relaxing restrictions on imports of Russian wheat.
“China has said they'll take the wheat that they have if other people won't,” Gulke says. “That says they are going to get protein one way or the other and won't need as much corn from the United States.”
Gulke says weeks like this one show just how volatile grain markets can be.
“Things are never dull in agriculture,” he says. “We must be ever cognizant of global events; we live in a really complex world.”
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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.