TAGS: Marketing, Overseas
December 18, 2014
“Wow.” That’s how Jerry Gulke, president of the Gulke Group, describes this week’s action in the corn market. December corn was up around 25¢ and November soybeans were up around 13¢. July wheat jumped 39¢ for the week ending May 17.
These positive moves followed last week’s surge lower, when December corn was down around 16¢, November soybeans were down 31¢ and July wheat was down 14¢.
Why the big turnaround?
“We finally got the traders concerned about the weather,” Gulke says. “We finally got to the point where it rained and rained, and we are running out of time—and the markets are believing it. Not only may we not get a lot of this planted, but we’re at the risk of yield falling because of late planting.”
Even though the unfavorable weather helped appreciate prices this week, Gulke reminds weather can turn fast. “That’s why we constantly preach flexibility in marketing.”
On Monday, May 13, soybean prices dipped to a 10-year low, as tensions mounted in the U.S.-Chinese trade talks. Corn wasn’t too far behind.
“That was all tariff rhetoric,” Gulke says. “Then suddenly, the weather market came in. The weather market trumped Trump, so to speak.”
From a technical perspective, Gulke says, anytime the market puts in new lows in and you have a massive reversal on a daily basis (like we did on Monday) it gives you a pretty good hint somebody was buying at those prices or you ran out of sellers.
“Well, the market turned and went up with a vengeance on Monday and then we continued to move higher,” he says. “Prior to that time, every time we had a rally it didn’t hold into the close; we would sell off. This week, it was just constant moves higher.”
In grain marketing, Gulke says, it’s not so much that you know where the market is going to do, but that you’re on the right side when that happens.
Technically Speaking: A Picture Is Worth A 1,000 Words!
By Jerry Gulke
Since before the Chinese retaliation tariffs a year ago, I’ve presented a focus that was not necessarily in concert with the general perception of the mass media. Since then our production per acre and per farm have fluctuated violently giving further support to my long-standing perspective of flexibility and pro-active thinking as well a due-diligence when it comes to marketing.
We are all good producers, but the rubber meets the road when it comes to knowing when to pass off risk (hedge prices) and when to accept risk (become unhedged). The results can be significant. For example lifting corn hedges last Monday could have meant from $50 to $60/ac additional revenue.
Just like a picture is worth a 1,000 words, bad advice isn’t worth the paper it is written on, but good advice can be priceless. A 30¢ move in corn is about $45 to $60/ac. A 20¢ move in beans is about $10 and 40¢ move in wheat is about $30/ac.
If you spent a large portion of your money on put options or believed in selling every 5¢ higher in grains because there was no potential for a rally or are now caught in a HTA or some sort of Accumulator Program that will buy your grains well below what they are worth, give me a call at 480-285-4745 or 707-365-0601 or contact firstname.lastname@example.org and leave contact info. Perhaps we can help, but time is running out.
Find previous audio and written reports with Jerry Gulke at agweb.com/Gulke
Jerry Gulke: Government Intervention Back In Vogue
Jerry Gulke: Has Reality Turned Into Fear?
Are the Grain Markets Facing Reality?
Grain Markets: The Calm Before the Storm
Jerry Gulke: Trade Deal or No Deal?
Check current market prices in AgWeb’s Commodity Markets Center.