Jerry Gulke: Grain Market Headwinds Continue into 2023
2022 year ended on a more positive note than 2023 began for the grain markets. March corn prices were down nearly 25¢, and March soybean prices were down 31¢ for the week ending Jan. 6. Wheat prices were down, across the board, from 35¢ to 55¢.
With 2023 just beginning, Jerry Gulke, president of the Gulke Group, says one thing is clear: This year is not like last year.
“We've got a lot higher interest rates, the cost of capital has gone up, our cost of production has gone up significantly, and we did not have a war last January,” he says.
On the first trading day of 2022, corn and wheat prices were down. But soybean prices were higher this year. This year all three commodities took a hit on the first trading day.
“We've got some headwinds this year that we would say were tailwinds last year,” he says.
On Jan. 12, USDA will release its monthly and annual Crop Production reports.
Gulke says the focus will be exports — or lack thereof.
“We're way behind in export sales, even though export commitments aren't too bad,” he says. “Export sales that are on the books are running 40% to 50% less than last year at this time.”
Ethanol usage is also down pretty sharply compared to USDA’s earlier estimates. Feed demand is also a question mark.
“What would really be devastating, I guess to me would be if we lowered demand and raised ending stocks,” he says. “Oftentimes the Jan. 12 report is a blockbuster. So, don’t go in with preconceived ideas.”
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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.
