Jerry Gulke: A Tale of Two Soybean Markets
Corn prices were basically flat and wheat prices were up 18¢ for the week ending Nov. 4. However, soybean prices were up nearly 40¢.
With U.S. soybean harvest at 88% complete, Jerry Gulke, president of the Gulke Group, says the market is sizing up the crop and buyers are trying to lock in their needs.
“We have two markets for soybeans — the domestic market and the global market,” he says. “The U.S. market on fire, with the crush margin being terrific.”
In the past, Gulke says, soybean crushers were happy with an 80¢ margin on each bushel of soybeans. Today, that number is closer to $3.50 per bushel.
On the global front, the U.S. dollar is still strong but could be topping. In mid-October, the U.S. dollar posted a major daily reversal lower, as the stock market, wheat prices and even energies jumped higher, signaling the U.S. dollar had peaked. If so, it might mean U.S. agriculture becomes more competitive.
“We're getting a little more competitive from the currency standpoint,” he says. “But when you post 60¢, 70¢ to 80¢ rallies, you take that away.”
The big issue is the shipping challenges on the Mississippi River.
“We need rain to get these rivers open and get the grain moving again,” Gulke says. “If that takes too long, Brazil will start harvesting and we’ll lose even more market share.”
USDA Report Ahead
On Wednesday, Nov. 9 USDA will release its monthly Crop Production and WASDE reports.
As always, Gulke says what you don’t want to see is for USDA to lower demand and increase production — even slightly.
“We want to see ending stocks stay tight to keep prices high,” he says.
If you’d like in-depth analysis from Gulke, contact him at info@gulkegroup.com
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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.
