Jerry Gulke: Grain Market Bottom = Catching A Falling Knife?
Last week we asked: Are ag commodities due for a reset?
This week’s market moves show the answer. December corn prices were down nearly 60¢, for the week ending June 24, while November soybean prices were down more than $1. All wheat prices were down $1 or more. July cotton prices were down 43¢ per pound.
Now, the question is: Where is the bottom?
“It's almost like catching a falling knife,” says Jerry Gulke, president of the Gulke Group. “The one good thing is it easier to do nothing after the market drops this much. The decision not to sell is a lot easier than it was when corn, beans and wheat were a lot higher.”
For 2023, he says, December corn prices are barely over $6 per bushel.
“With my basis, that would be $5.75 per bushel for corn for next year,” Gulke says. “With the high input prices, that probably won't meet anybody's breakeven level. But the market doesn't care. We'll know once we’ve seen the price bottom when it turns around and goes back up.”
On a positive note, Gulke says, lower prices at the end of June are more positive than if it was August or September.
“If this was September, you could say there's not a bottom in sight for a while,” he says.
Big Reports on the Horizon
On Thursday, June 30, USDA will release its annual Acreage and quarterly Grain Stocks reports. The reports are coupled with a long weekend in honor of Independence Day, as well as the end of the week, end of the month and end of the quarter.
“That can really set the stage for what's coming thereafter,” Gulke says. “It's probably going to be easier now for a bullish surprise when the prices are down as much as they are.”
These reports are always known for a surprise or two. Gulke says he’ll be watching any major acreage shifts for corn or soybeans.
“I switched to more corn acres, but that was an economic situation,” he says. “Maybe not everybody did that. So, we could the markets acting like there's going to be 1 million more acres of soybeans out there. That's probably not going to be the case, but we need to be somewhat prepared.”
Check the latest market prices in AgWeb's Commodity Markets Center.
Gulke Group 2022 Summer Conference: The conference is set for July 14-15, in Lombard, Ill., at the Embassy Suites. Guest presenters will include William Wilson from NDSU, Glen Buckley of NPK Fertilizer Advisory Service, Drew Lerner from Worldwide Weather, Roger Wallace (livestock economic outlook), Michael Drury of McVean on domestic and global economy, and Jerry Gulke on marketing strategies.
For more info contact Jamie at 707-365-0601 or info@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.
