For the week December corn was up ¾ cents, March corn was ½ higher, November soybeans gained 22 ¼, January soybeans were 23 ½ higher, December soybean meal tacked on $13.10, December bean oil lost 86 points, December soft red winter wheat gained 8 ¾, December hard red winter wheat was up 10 and December hard red spring wheat was also up 10.
Void of USDA Data “Refreshing”
With the government shutdown the grain market has been void of USDA data with the exception of the export inspections.
Jerry Gulke, president of the Gulke Group, says he hasn’t missed the government data including the October WASDE.
“It’s kind of refreshing to have to do some due diligence, it kind of forces you to do some research and look at things and that’s what we’ve had to do. I’m not so sure we haven’t been led astray a little bit by you know unintended consequences of maybe bad data that we got or late data we get out of USDA on exports, usage, acreage and so forth.So, now we’re kind of on a level playing field,” he explains.
Private firms have been doing their own research, and Gulke says the Gulke Group has been doing its own research for years on supply and demand.It leaves him wondering when someone is going to say the market can do without a lot of this government data.Besides, he says by the time the information is released its old news, and the market has already digested it.
With China not buying U.S. soybeans, Gulke says there have been a lot of questions about whether or not other smaller customers could step in to make up for the lost business.Their analysis shows that the situation is not as dire as some in the trade are making it out to be.
“There’s hope out there than we might get through this without China and I’ve been talking about it for decades that the U.S. needed to diversify and get rid of that big gorilla in the room because it was going to come back to bite us one day,” he says.
Does the U.S. Get a Deal with China?
Despite that, soybeans led gains for the week, up over 23 cents on the January contract on hopes of a deal with China.
Gulke says China is a big enough country and they use enough that they don’t want to lose the U.S. as a business supplier for raw materials like soybeans.
“Because when you look at Argentina and Brazil, you know, they’re kind of fragile government -wise and you really kind of need two suppliers so that you can make the other ones honest when they get kind of out of kilter, you know, and want to fleece you when it comes to selling or importing stuff. So, you really need another partner if you’re China,” he explains.
Will China Buy U.S. Soybeans?
Gulke says Trump has dug himself a hole, “And he can’t get out of it with money, and he has focused in on soybeans and helping the soybean farmer and so, he’s got to come back with something.”
He contends that China could buy U.S. soybeans and use the excuse that they are buying them for their strategic reserves because they can store U.S. soybeans better.“They can’t store Brazilian beans,” he says.
So Gulke is watching who buys soybeans.He says if the crushers are doing the purchasing they will buy for their immediate needs, and they can buy out of Brazil.“But if a government agency buys it, that’s usually for storage and for a long-term type thing for strategic reserves,” he adds.
He thinks China needs soybeans to bridge the gap between when the U.S. harvest ends and when Brazil’s harvest starts.
“There’s some talk that they need about 10 million metric tons. And, you know, that’s about 300 million bushels. And that’s about the deficit that would really help us,” he says.
So, he expects a positive outcome of next week’s meeting between President Trump and Chinese President Xi on the sidelines of the APEC Summit in South Korea. And even without China, Gulke says soybean prices have now rallied back close to where they were last year. “So that’s a good move,” he concludes.
Harvest Wrapping Up
On Friday, Gulke was wrapping up the harvest on his farm and delivering corn right out of the field on a basis contract.
“And about 80 % of the corn that we’ve delivered has not been covered. We’ve been hedged and bought it all back in previous conversations we had when we felt the harvest hole was in. So, we picked up some money and now we’re subject to the futures. We got to, we fixed the basis, which I didn’t like, but we had to do it in order to get a delay and fixing the price. So that helped a lot,” he adds.
Gulke says they’ve seen enough price appreciation through holding the grain in on-farm storage to help pay for trucking and some other expenses.“So, we’re still positive,” he says.
For more information contact Jerry at info@gulkegroup.com.
