The grain markets continued to show strength this week. But how will continued global uncertainty, a long weekend and USDA’s initial 2022 estimates impact prices?
March corn prices were up 3.25¢ and new-crop December corn prices were up 2.5¢, for the week ending Feb. 18. March soybean prices were up 15.5¢, and November soybean prices were up 19.25¢. March wheat prices were flat for the week.
South America continues to drive the soybean market, says Jerry Gulke, president of the Gulke Group.
“Early Brazil estimates were around 145 million metric tons (MMT) of soybeans,” he says. “It is down to 130 MMT. That’s a 500-million-bushel shortfall.”
Yet, Gulke says, the size of the South American soybean crop may still be overestimated.
“I think you’ve got a problem in South America that’s irreversible,” he says.
Related, edible oils, including soybean, canola and palm, are at contract highs.
“We are seeing a paradigm shift, especially soybeans, that has been hard for the market to get its arms around,” Gulke says.
Crop Insurance Discovery Period
The crop insurance spring discovery process is more than halfway over. So far, the guarantee prices for crops include:
- Corn: $5.85 (versus $4.59 in 2021)
- Soybeans: $14.23 (versus $11.87 in 2021)
“Once you get through the first 15 days, you can’t change the prices much,” Gulke says. “A 40¢ move either way won’t change the average much because when you start out so high.”
As a result, he says, crop insurance may not influence farmers much further on their crop mixes this year. But they will likely pay 30% more for crop insurance this year versus last year.
At this point, input prices won’t likely have a big impact either, Gulke adds.
“I think a lot of the chemicals and fertilizer has been purchased already by farmers, so it’s going to be very difficult for them to switch much,” he says. “I bought about 80% of my fertilizer last fall and most of my chemicals. The one that I was disappointed in is I couldn’t get access to my favorite fungicide, since I didn’t buy that in advance.”
All Eyes On Next Week
The grain markets are closed on Monday in honor of President’s Day. Gulke says any movement on the Russia-Ukraine tensions could have added impact with the long weekend.
“Three day weekends always bring risk and make traders nervous,” Gulke says.
On Feb. 24-25, USDA will hold it’s annual Agricultural Outlook Forum. USDA will release its initial forecast for the agricultural economy, commodity markets and trade in 2022 and discuss U.S. farm income situation
The Gulke Group conference is set for March 17-18 near Chicago. Speakers will cover weather, fertilizer and market outlooks. 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. 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.
