For the week, September corn was 9 ¾ cents lower, December corn fell 8 ¼ cents, September soybeans slid 29 ¼ cents lower, November soybeans dropped 24 ¾ cents, September soybean meal lost $22.00 per short ton, and September soybean oil gained 74 points. September Soft Red Winter wheat was up 3 ½ cents, September Hard Red Winter wheat fell 5 ¾ cents and September Hard Red Spring wheat lost 5 cents.
Both new crop corn and soybeans put new lows in on Friday, and those markets also posted lower weekly closes.
Jerry Gulke, president of the Gulke Group, says the markets are gearing up for higher yields in the August WASDE. He thinks USDA will only provide an incremental increase in this report versus the final yield because their estimate is based on satellite imaging and farmer surveys.
“They haven’t done any boots on the ground surveys; they haven’t counted the kernels or the rows yet,” he explains. “This is strictly a survey thing, so they’re not going to go much, but I think based on the weather we’ve seen, the ratings and the surveys they’re going to get back I think they’ve got to raise corn yield to that 182 area.”
Gulke believes that is achievable just based on how his own crop looks in Northern Illinois.
On soybeans, he doesn’t expect much change in yield from the 52 bu. per acre USDA estimated in the July report.
However, he says on both corn and soybeans it may depend on what revisions USDA makes on demand and acreage.
“USDA said they are going to use FSA data and insurance numbers, and if they do that, I’ve got a feeling some of this wet area got planted to soybeans,” Gulke explains. “A lot of guys don’t like to take prevent plant and instead will plant it to beans, so we could end up with a few more thousand acres of beans, and that will be tacked to harvested acres.”
Gulke says looking at the November soybean chart gives a clear indication of why the bias has been so bearish in the market.
“The demise started in January with a weekly gap lower,” he says. “If the weekly down gap last week at about $10.45 turns out to be a ‘mid-way’ gap, the traders will look at another $2 downside risk.”
When added to the lack of a weather threat this summer, Gulke thinks traders will keep that bias until something fundamental happens to change the trend or prices get low enough to discourage planting.
He says analysis of the monthly continuous chart for December corn shows him farmers can expect lower prices levels for an extended period of time.
“It tells me right now we’re not going back up to the breakout area,” he says.
“Corn broke some significant levels on the December chart,” Gulke adds. “For five years, prior to 2020, we had a range of $3.20 on corn up to $4.80 but rarely exceeded that high. Then in 2020 we took off above $5 and had bull markets, encouraging more supply out of South America.”
Currently, the corn market is struggling with that oversupply and has broken below long-term support at the $4.80 point.
“And the continuous chart, which would now be September, that tells us that you need to be prepared to sell grain at a lot less than you have in the last three years,” he explains. “So, we could very well be in that $4.80 to $4 level on corn for a while.”
If you know the range, Gulke says, you can structure your marketing plan accordingly, but you have to be flexible.
“The charts tell me for now I know where it’s not going,” he adds. “It’s not going back up to where we just crashed below $4.80, because La Niña didn’t happen, China didn’t come back in, and Brazil’s crop was much better than all the pundits down there.”
Gulke says unfortunately the easy money is gone in the market, but there are still some opportunities to capture the carry in the deferred contracts.
“Now, we have to hope for making nickels and dimes in the market,” he says.
For more information you can contact Jerry at info@gulkegroup.com.
