For the week March corn was down 4 ½¢, March soybeans fell 13 ¾¢, March soybean meal lost $3.80 per short ton, March soybean oil gained 89-points, March hard red winter wheat tacked on 19 ¾¢, March soft red winter wheat was up 15 ½¢ and March hard red spring wheat surged 21¢.
Most of the agricultural markets were lower on Friday with President Donald Trump confirming he would be imposing 25% tariffs on Canada and Mexico and 10% tariffs on China on Feb. 1.
Jerry Gulke, president of the Gulke Group, says corn and soybeans posted lower weekly closes, which was the first time in several weeks for corn.
According to Friday’s CFTC Commitment of Traders Report the managed money funds are also long 443,875 futures contracts.
While it coincides with the higher corn prices, there is fear about how long the funds want to extend their position in the corn market.
So, is the bull market in the corn over or just beginning?
Gulke says the action did not do any technical chart damage, and March corn still closed in the upper end of the wide weekly trading range, so he is still optimistic the rally is not over in corn.
“Corn is more than $1 a bushel higher than it was last fall, and in Illinois that amounts to around $200 per acre in revenue,” he says.
The next area of chart resistance is the psychological $5 mark followed by $5.20 indicated on the weekly continuation chart.
Gulke has acknowledged the bull market in corn for several weeks and says using the March corn chart going back to last year provides an understanding of the price discovery system and why the markets bottomed August of last year.
Reviewing the set up, nine months ago Gulke questioned the validity of corn stocks presented by NASS in the March WASDE report saying it was 700 million bushels too high.
By the Jan. 10 WASDE report, he says USDA showed a 1.53-billion-bushel final ending stocks number for the 2024/25 marketing year.
“It’s not the 2.6 billion figure estimated by USDA early in the season and the 2 billion carryout in later months,” he says. “In fact, the carryout now at 1.533 billion is 500 million bushels less than when the May high of $5.20 was printed.”
So, he says that begs the question of what price corn needs to be to represent 500 million bushels less stocks?
“Given recent estimates U.S. farmers will plant 2 million more corn acres in the 2025 growing season, ending stocks would be approximately the same as this year slightly above 1.5 billion bushels, leaving demand unchanged,” Gulke explains.
He adds a 4-million-acre increase in corn merely gets ending stocks to 1.8 to 1.9 billion bushels.
“With yields 4 bu. off of the initial estimate by NASS to the January 2025 revision, there are odds yields at some time before May could drop below 180,” he says.
That is a fairly bullish setup, even with higher corn acres, with a shift to more corn that results in U.S. farmers planting less soybeans in 2025.
Conversely, Gulke says applying the same rationale to soybeans is why prices are at levels not thought possible with the fundamentally negative news out of South America.
Another factor supportive of soybeans is the recent rally in soybean oil as the March contract market broke out of a bullish flag pattern on the charts on Friday and posted a higher weekly close.
Gulke says the charts indicated a change in trend several weeks ago, but the bean oil market got an additional bullish push on Friday from the likelihood of tariffs on imports of canola/canola oil from Canada.
This chart breakout he thinks could lead to additional buying, which would continue to hold up soybean prices.
For more information contact Jerry at info@gulkegroup.com.
