The bottom line from today’s USDA report and the market’s reaction is to store corn and sell beans, according to Jerry Gulke of the Gulke Group. "Corn opened higher, sold off, and closed up almost 8¢—a new high close. We saw a lot of capitulation today—people gave up hoping to buy at lower prices and went ahead and bought. Looking at a chart, we could see as much as a 40¢ pull back to $4.40; if so, it would get bought."
Soybeans, on the other hand, closed on the lows of the day, he adds. "We may not know how low they can go. I also don’t think they’ll go higher if there isn’t a supply change. With beans around $10.50, they still offer good profits so if I were to sell anything it would be beans. We bought some $10.30 put options ahead of the report and we’ll hold on to those."
The wheat market closed about unchanged, and 20¢ off the lows for the day. "It is telling us it doesn’t believe we have 800 to 900 million bushels of stocks. Some millers say they believe it is more like 600 million," says Gulke. "The charts have something called a saucer bottom, which can be explosive. Considering speculators outside of agriculture hear wheat prices going up and they think bread prices, this is the market that often draws speculative money. Right now the market will try to keep prices strong to ensure we get the extra U.S. acreage many expect to see planted next month."