Jerry Gulke: What Can Farmers Learn from the Stock Market Collapse?
The stock market is facing losses not seen in two decades. Meanwhile the grain markets continue to find strength. Jerry Gulke, president of the Gulke Group, shares perspective on what farmers should understand.
July corn prices were down 2¢ and December corn prices were down 16¢, for the week ending May 20. July soybean prices were up nearly 59¢ and November soybean prices were up 23¢. All classes of wheat were lower from 6¢ to 39¢.
Meanwhile, the S&P tumbled on Friday, due to surging inflation and rising interest rates. Could a bear market be forming?
“We knew we were going to see a setback in the stock market at some point in time,” Gulke says. “Well, it’s coming in a lot more severe than most expected.”
Major retailers, such as Walmart, Target, Home Depot and Lowe’s, all posted disappointing financial results this week. This could be a sign, Reuters reports, that rising prices have started to hurt the purchasing power of U.S. consumers.
“Walmart was looking forward to the fact the consumer sector was in pretty good shape because it had gotten a lot of money,” Gulke says. “The general perception was there's still trillions of dollars left in the economy to be spent and it could take a year or more before all that money works through the system.”
Yet, Walmart CEO Douglas McMillon said in his company's latest quarterly report the company was experiencing "double-digit inflation" in its food prices. The company’s quarterly earnings were down 24% from a year earlier.
“Think about what would happen if agriculture took a reset like that,” Gulke says. “We're the only sector left that's really doing well, relatively speaking.”
As a result, Gulke says farmers need to preserve equity and be aware of what's going on in the bigger market picture.
Planting Progress in Focus
Gulke has been planting soybeans on his northern Illinois farm, with corn planting complete.
“We planted soybeans earlier, and they're up and going,” he says. “We ended corn yesterday and even planted a little sweet corn. We've got less than two days left to finish soybeans.”
While Gulke says he’s ready for a rain delay to take a rest, he would not share those views with his daughter and son-in-law who farm in North Dakota.
“My daughter said this morning it just won't quit raining. They may even get some more snow,” he says.
“They have very little, if any, planted. Very few people have any have done anything.”
After the cold spell this weekend, Gulke says the forecast in North Dakota is calling for warm and dry days.
“Once it opens up, they will run day and night to plant what they can before the deadlines for insurance,” he says “They will continue to plant on into June since they do not want prevent plant because it ruins your ground. If it's underwater, then you then you take it, but otherwise you don't use it with these kinds of prices.”
The USDA Crop Progress report that comes out Monday will shill show a record slow pace for planting in North Dakota, South Dakota and Minnesota, Gulke says.
“Yet on Friday, Minneapolis wheat was down 50¢ — when we know very well that's the premium wheat of which we have a shortage,” he says. “Yet we can't hold the price up. It’s concerning and deserves watching.”
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.
