Jerry Gulke: Grain Markets Drift Lower Nearing Major Support

The corn and soybean markets continued to drift down this week. ( AgWeb )

The corn and soybean markets continued to drift down this week. December corn closed nearly 12¢ for the week ending July 26, while November soybeans were down 19¢ and December wheat down about 10¢.

“The weather causes prices to go higher, of course, when it didn’t look like we’d get the crops planted,” says Jerry Gulke, president of the Gulke Group. “Now that we got them planted, the hot weather without a lot of extreme heat is good for crops. The weather is certainly are not making the crop any smaller than what it is. But what it is, is going to be the big question.”

This week, Gulke traveled through parts of the Dakotas. He went from Sioux Falls, S.D., along I-29 to Fargo then west along I-99 past Valley City, N.D. Then he traveled north and west to Minot, N.D.

“I knew it was bad in South Dakota and in places in North Dakota,” he says. “But it was much worse than then I then I thought, at least from what I saw. I can honestly say I didn’t see one excellent soybean field, with most at a fair to poor rating.”

Overall, the soybeans were short, Gulke says, and the corn was uneven along his route.

“I would say that maybe half the corn looks good,” he says. “In soybeans, I’d say at least 20% of the beans are just terrible with 10% OK.”

As of July 21, USDA estimates 10% of the nation’s corn crop has an excellent condition rating, with 47% at a good rating. That leaves 30% in fair condition, 10% in poor condition and 3% in very poor condition. 

On July 23, 48% of U.S. farmers said they expect their corn crop will deliver below-average yields this harvest, according to a Farm Journal Pulse text message poll. Of the 1,082 farmers who responded to the survey, 12% say they didn't get their crop planted. Only 10% of farmers surveyed say their crop is above average this year.

For soybeans, USDA reports 8% of the nation’s crop is in excellent condition and 46% in good condition. That leaves 34% in fair condition, 9% in poor condition and 3% in very poor condition. 

At this point, Gulke says, the grain markets are just languishing above some critical support levels. He doesn’t expect the weather conditions over the next few weeks to cause major price moves. 

What will be the next price mover? Most likely it will be the Aug. 12 USDA reports, Gulke says.

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