With a bit of positive news or at least a whiff of optimism regarding trade talks, commodity markets didn’t share in the enthusiasm. July corn closed the week down 4¢ and July soybeans were down 10¢.
This is not the movement expected given China’s pledge to buy a “substantial amount” of agricultural, energy, manufactured goods, and other products and services from the U.S. In addition, dry weather conditions in South America are causing problems with their crops.
“It’s confusing a lot of people out there,” says Jerry Gulke of the Gulke Group. “It’s hard to know what is pure speculation and what is fact.”
Gulke explains there seems to be an underlying optimism out there that people think if we make a deal with China they’re going to come back in and buy a lot of beans but he doesn’t believe that’s going to be the case.
This does raise an interesting point that the manipulations of tweets and rumors might have more impact on market place then true supply and demand numbers do anymore. It begs the question, is the Board of Trade, or price discovery system, really working? Gulke speculates the trade could be ignoring underlying fundamentals that effect the global situation, which makes predicting market movements more difficult especially for new traders.
There is positive news out there: lower fuel costs, MFP payments (which were not part of any farmer’s original bottom line), trade talks moving in the right direction, beans moving in the right direction, etc.
Cash flow is tight and farmers need the government to get things fixed and soon, but as Gulke says in this week’s interview, “it’s not all bad.”
Listen to Jerry Gulke’s full commentary in this week’s Weekend Market Report. He dives deeper into this week’s market movers and gives a sneak peek at his February Top Producer column and the topics he’ll be discussing at next week’s Top Producer Summit.