The trend in the grain and oilseed markets this week was down. July corn prices were down 26.25¢, while December corn prices were down 40.75¢. July soybean prices were down $1.11, while November soybean prices were down $1.24. July wheat prices were down 18.5¢, and Minneapolis wheat prices were down 6¢ for the week ending June 18.
The market moves this week give volatility a whole new meaning, says Jerry Gulke, president of the Gulke Group.
“A lot of this started with the Federal Reserve coming out and talking about the inflation problem some perceive we will have,” he says. “It looks like we’re going to have to watch this closer than we thought, with the Fed less committed on interest rates remaining low.”
Another issue weighing on the markets is the latest news out of China, Gulke says. Reuters reports China will issue new rules on the management of price indexes for commodities and services. This move comes as the Chinese government steps up scrutiny of the country’s commodity markets and battles to contain inflation.
And finally, weather continues to influence prices.
“Weather forecasters are saying sometimes in the next two weeks you could get 1” to 2” of rain over across the majority of the Midwest,” Gulke says. “We had rain come through last night in northern Illinois. We had three systems come through, and we got a total of a tenth of an inch. We had a 95% chance of rain. We did get rain — about 17 drops.”
Gulke says the markets are quickly shifting gears to focus on the June 30 Acreage report. Early estimates range from record planted acres to no changes from the March 31 Prospective Plantings report.
“We’re in the camp of about 3 million acres more of corn than what was estimated in March,” Gulke says. “If you multiple 3 million harvested acres by 180 bu. per acre you get 540 million bushels. If we get the acres and the yield doesn’t fall too far, we can offset a crop problem in the Western Corn Belt and northern Plains.”
That level of acres and a lower yield, he says, does not justify $6 corn and certainty not $7 or $8 corn.
“You go the other way, with the yield dropping 10 bu. an acre, and it is anybody’s guess how high price of corn has to be in order to curb demand,” Gulke says.
The Gulke Group will be hosting their summer conference July 14-16 in Vail, Colo. Speakers include Jerry Gulke, Bill Wilson, Michael Drury, Glen Buckley and Ken Erickson. Learn more at GulkeGroup.com.
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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.
