NCI Market Update Webinar Series | Featuring Jerry Gulke
Jerry Gulke, Founder of Gulke Group.
The Northern Crops Institute (NCI) hosted another monthly Market Update on November 16, 2022. This month’s Special Edition webinar featured speaker Jerry Gulke, Founder of Gulke Group. During his presentation, he discussed the World Agricultural Supply and Demand Estimates (WASDE) report for key agricultural products.
Gulke began by reviewing the economic conditions in the present as compared to 11 years ago. As he described it, much growth occurred during most of this time period. This was mostly driven by drastic policy changes and other influences that drove the economy towards a record high. That is, until 2020, when the pandemic began. This caused the economy to collapse, and has still not fully recovered as of recently. Though, the economy has improved since its initial collapse, as reflected in indicators such as the recent U.S. Dollar Index and also the average price of natural gas, and crude oil prices.
Production figures for U.S. commodities.
As the chart to the left shows, U.S. production for various commodities has varied dramatically, depending on the specific commodity in question. Both positive and negative changes were observed in many commodities across the board, though some remained consistent with their original estimates (represented by “no change” on the chart). Consumption was similar; depending on the specific commodity in question, the U.S. consumed more or less than originally forecasted (ex. corn). Again, some remained consistent with their original estimates and were observed having no changes.
Exports were, overall, slightly below what was originally forecasted, with many commodity exports falling short of expectations. Corn especially has taken a strong hit, with over 300 million fewer-bushels being exported as of this latest WASDE report. Despite this, a few commodities have managed to exceed export expectations (such as soybean meal and turkey). Strengthening demand for corn and other low-export commodities are expected to reverse this trend, though. This is especially true as we look ahead to 2023.
Looking more closely at corn specifically, Gulke explained that global corn balances as of this latest WASDE report were higher than last year, meaning that this trend of lower-than-expected exports is being felt across the entire world. In other words, ending stocks for corn are higher than last year, which goes in line with the aforementioned exportation issues facing the commodity. Gulke predicted this would remain the case into next year, with a forecast of ending stocks even greater than this current year’s stocks.
Soybean and corn production in South America.
For soybeans, production is lagging behind what was originally forecasted, though not by much. This falls in line with corn production also lagging behind what was expected earlier on (it should be noted, however, that the margin for corn isn’t as wide as it is for soybeans). Next year’s estimates place soybean production just shy of current estimates for this year, and slightly ahead for corn, as the graphic shows.
Finally, the WASDE report for wheat showed that ending stocks for this commodity was actually lower than this time last year, which points to its exception to the lower-than-average export numbers (i.e. more of this crop has been exported this year than last year). Also, when examining a wide variety of conditions related to wheat supply and demand for this year (planted area, imports, food use, exports, etc.), they once again varied either above or below original forecasted figures (most remained slightly under original forecasts, though).
Overall, Gulke’s main takeaway is that, despite the less-than-ideal conditions, the market is adjusting to events around the world that is influencing it. Events such as the various droughts over this last year, the ongoing crisis in the Ukraine, and many others are forcing the market to adjust accordingly. And, while some figures are lagging behind where they were expected to be, the market is still proving to be resilient enough to face these conditions. This is helping to inspire confidence into analysts like Gulke for better times ahead.
The Northern Crops Institute greatly appreciates Jerry Gulke’s involvement and input in this webinar. At NCI, we continue to work towards fulfilling our mission to support regional agriculture and value-added processing by conducting educational and technical programs that expand and maintain domestic and international markets for northern grown crops. All of this wouldn’t be possible without the innovative ideas of guest speakers like Gulke.
For more information about future webinars offered at NCI, click here.
To watch the recording, click the video below.