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Last week begged the question: How high is high enough for grain prices? Now the question may be: How low is low enough?
December corn prices were down 13.5¢ and November soybean prices were down 42.25¢ for the week ending Sept. 25. December wheat prices were down 31¢.
Even though prices are sliding from their recent highs, it’s important for farmers to maintain perspective, says Jerry Gulke, president of Gulke Group.
“The fact is $10 beans are good money in almost anybody's book,” he says. “Even if prices go lower, sales at that level was probably a good decision.”
Between the price increase in soybeans and the second round of Coronavirus Food Assistance Program (CFAP) funds being distributed to farmers, Gulke says farmers are in a much better financial position than 30 or 60 days ago.
“This is a year to count our blessings and pay off some of the debts because I'm not sure this is going to come back anytime soon under any administration,” he says. “For right now the trend is down until it changes again—just like it was when it was straight up. We’ll have a signal when to accept risk again and not sell anymore.”
In Gulke’s recent Top Producer column, he presented a scenario of a bullish trend for soybeans. If China continues to buy from the U.S. and the final U.S. soybean yield falls below 49 bu. per acre, things could change dramatically.
“China is continuing to buy,” he says. “If South America starts to see some problems with the beginning of planting due to the El Nino situation, that could make China a bit nervous in depending on them for grain.”
As for the yield, Gulke says a less than 50 bu. national average yield may not be possible. “Some of the earlier beans that have been harvested have been very good. That means the beans that were planted later will have to be much lower in yield.”
On Sept. 30, USDA will release a quarterly Grain Stocks report. Gulke says there’s a possibility USDA will lower corn stocks, which would help the balance sheet.
“What we don’t want to see is the stocks higher than expectations,” he says. “The bull needs to eat every day and we need to see that bull eat some of our stocks.”
Read More
Jerry Gulke: Is the 800-lb. Gorilla Back?
Jerry Gulke: Lessons Learned in 30 Years of Grain Marketing
Find more written and audio commentary from Gulke at AgWeb.com/Gulke
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.
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