Jerry Gulke: Weather Forecast a Make-or-Break Point for Grain Markets?
Will it rain or not? That’s the key question for this weekend.
“The weather is a big deal this week and will be a big deal for the coming weeks,” says Jerry Gulke, president of Gulke Group.
For the week ending Aug. 5, corn prices were down 6¢ to 10¢, soybean prices were down 23¢ to 60¢. Wheat prices were down 20¢ to 30¢.
Earlier this week prices were down even more on the larger-than-expected rainfall in farm county last weekend.
“This weekend is even more important because we're talking about some rain, about a half to an inch, in northwest Iowa, southern Minnesota and parts of South Dakota, where it has been dry,” Gulke says. “If that would be a bust, there's not much coming after that. That could really affect both corn and soybeans.”
Are Harvest Lows In?
For several weeks Gulke has been analyzing if the harvest lows are in for grains and oilseeds.
“We thought we were making harvest lows due to technical action,” he says. “We got down to $5.65 for December corn, rallied up and then went right back down again. Now we're at a level of about $6 per bushel. So, we have about a 50¢ risk on the downside. We have to get above the $6.50 level in order for it to look like the market has changed.”
If the key areas do not receive rain, Gulke estimates corn prices have around a 50¢ upside. If the rains do come, the markets will likely stay in a sideways trading range.
“Certainly, there was grain sold by farmers who took advantage of that $6.50 to $7 price area,” he says. “So, there's really no shortage of new-crop grain because it will come to the market. We just need to see if there's enough demand out there to make people want even more than what we've already sold.”
As such, he says, the fall timeframe will be a noteworthy time for the grain markets.
“It will be interesting to see what the farmers can hold enough off the market to incite people to keep on going,” he says. “I think we've made the lows, but we'll see how that turns out. There should be a lot of fireworks Sunday night when the grains open up again.”
Check the latest market prices in AgWeb's Commodity Markets Center.
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.
