Jerry Gulke: Are the Grain Markets Finally Trading Reality?
For the third week of January, the grain markets featured some explosive prices.
March corn prices were up 21.75¢ and new-crop December corn prices were up 7.25¢, for the week ending Jan. 21. March soybean prices were up 45.25¢, and November soybean prices were up 22.25¢. March wheat prices were up 37¢.
“We went into a three-day weekend for trading with ideas there would be some rains in the southern part of Brazil and in Argentina that would be supporting for crop development, and it would stop raining in northern Brazil to allow some harvesting of crops,” says Jerry Gulke, president of the Gulke Group.
On Tuesday, he says, the markets had to determine if the rains were enough to stop the crop deterioration, slow it or reverse it.
“The market decided it is what it is, and the crop was not going to gain back a lot that it lost,” he says. “Over the weekend, there was some 110° weather in Argentina. The market dealt with that and it came back with a vengeance.”
From a technical standpoint, Gulke says, the markets showcased some bull spreads, where old-crop corn and old-crop soybeans went up more than new-crop corn and new-crop soybeans. In addition, several weekly key reversal ups were posted.
“The weekly closes pretty impressive to say the least,” he says. “We're in three weeks into January and the markets look pretty good.”
Tensions Between Russia and Ukraine
Leaders from the U.S., Germany, France and the United Kingdom held meetings with each other and Russian officials last week in an attempt to avoid a Russian invasion of Ukraine. President Joe Biden initially said retaliation from allied nations was unlikely if there was a minor Russian incursion, but he later took a stronger stance.
Despite diplomatic attempts, some sources believe it’s a matter of when not if Russia will invade Ukraine
“Now we've got a lot of uncertainty,” Gulke says. “My gut feeling is that we win this one. It goes away and we come up with a deal. The market is concerned.”
Market Influences on the Horizon
From South American weather to global political turmoil to the U.S. acreage battle, a lot of information is being digested in the price discovery process, Gulke says.
“We're poised in these markets to where you could literally gap higher and trade above this week’s highs in corn and soybeans,” he says. “We could repeat last year’s grain rallies into the spring. We are not only at the mercy of Mother Nature in South America, but on the whims of political leaders, and egos.”
Get in Touch with Jerry
Do you have questions for Jerry? Contact him at info@gulkegroup.com or 312-896-2090 or GulkeGroup.com
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. 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.
