It’s been a long time coming. The corn market has finally seen some positive technical support.
After piles and piles of negative news, the corn market showed a little glimmer of hope this week.
From a technical standpoint, Jerry Gulke, president of the Gulke Group, says the corn market made a positive move.
"This week, in March corn, we took out last week’s lows and also touched $4.10 again," he says. "In response, we have lifted all of our hedges, which may come as a surprise."
Hear Gulke's full audio analysis:
Overall, Gulke says the grain markets have digested a lot of negative news recently – everything from China rejecting some GMO corn and the acknowledgment the 2013 crop was huge. "We think, at this point, we have discounted all of the negative news," he says.
To gain some perspective on the current market situation, Gulke and his colleagues have researched the grain market movements at this time of the year in 2008.
"That year was very similar to now," he says. "In December 2008, we had 100% of our old-crop corn sold and about 80% to 90% of our 2009 corn sold because of the financial debacle and the liquidity crisis. The market was negative, just like this year."
He says they lifted their hedges. Then, the market rallied from around Dec. 5 to Jan. 6, by about $1.20. Gulke says in 2008, prices were around $3.50. "We rallied into January, but the January report was the final nail in the coffin. We didn’t close higher again for 2009 corn in 2009."
Between now and the end of the year, Gulke says trading is pretty light. "A lot of people don’t want to have positions on," he says.
Based on his research on 2008, Gulke says there’s a chance prices may grind higher through this year’s holiday trading season. "We hope something positive comes out; we’ve had about all the negative fundamental news we can get," he says. "Just maybe we’ll get a rally."
Dec. 10 Reports on the Horizon
USDA’s December round of Crop Production and World Agricultural Supply and Demand Estimates will be released at 11 a.m. CDT on Tuesday, Dec. 10.
"We’ll probably see a ho-hum report," Gulke says. "The December report doesn’t normally change the U.S. production numbers, but we can’t count that out."
Overall, he thinks the focus of the report will be on the world outlook. This week, Canada Stats released its update on the 2013 crops. Record crops for wheat and canola were noted, as well as a better-than-expected corn crop.
"Their crops got bigger, so there’s a chance our crops got bigger, too," he says. But, he says USDA will probably not make any major revisions to crop sizes until January.
Gulke says he hopes USDA won’t lower feed or export demand. "We’d like to see a fairly neutral to friendly report," he says. "If that happens, we should see a gradual rise through the rest of December."
Have a question for Jerry? Contact him at 815-721-4705 or firstname.lastname@example.org.
For More Information
See current market prices in AgWeb's Market Center
Visit AgWeb.com on Dec. 10 full coverage and analysis of the USDA reports following their 11 a.m. release. Read AgWeb's pre-report coverage.