Jerry Gulke: Is the Market Signaling an Acreage Switch?
This week corn prices topped $8 per bushel and soybean prices topped $17 per bushel. With slow planting progress, these prices could be trying to attract or commit acres to certain crops.
July corn prices were up 4¢ and December corn prices were down 11¢, for the week ending April 22. July soybean prices were up 23¢ and November soybean prices were up 4¢. July wheat prices were down 30¢.
Last week, Jerry Gulke, president of the Gulke Group, asked: Are Grain Prices Getting Too High?
“We had a good start to the week,” he says. “We broke out in the new highs and then the market started to sell off.”
In corn, he says, we did take out the highs that were made in March.
“Then we turned right around and fell back below those highs,” Gulke says. “In soybeans, we didn't do that. Instead, we posted daily key reversals down on Friday.”
Gulke says the markets may already in the stages of curbing demand. Beyond a slow planting pace, he says lower Chinese demand, the Russia-Ukraine conflict, crop conditions in South America and the stock market are impacting the grain markets.
“There are lot more headwinds out there than just the fact that we may or may not grow a crop in the U.S.,” he says.
As of April 17, USDA estimates 4% of the U.S. crop has been planted. That compares to 7% planted by this time in 2021 and a five-year average of 6% planted. In soybeans, only 1% of the U.S. crop is in the ground, which is similar to the five-year average.
With planting progress slower than normal, Gulke says he and other farmers are looking at their ability to switch their crop acres.
“I punched the numbers in my spreadsheet earlier this week,” he says. “In some cases, it can be from $175 to $220 more net income to switch from soybeans to corn. I looked at some of my good ground where I know I can get 200 bu. an acre in corn, but I don't know if I can get 70-bu. soybeans. I called up and secured fertilizer and chemicals.”
Gulke polled several of his clients on if they were making switches. Several plan to switch and have marketed their expected production of additional corn acres.
“I think when we're done, we might easily see 1 million to 1.5 million more corn acres, provided Mother Nature doesn't just keep us out of the field until June,” he says. “A lot of people said they will stretch that envelope well past into in the middle of May to plant corn if they have to.”
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 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.