For the week May corn fell 35½, December corn lost 20¢, May soybeans plunged 31½, November soybeans dropped 30¼, May soybean meal was down $3.70 per short ton, May soybean oil plunged 322 points, May hard red winter wheat sunk 48¾, May soft red winter wheat lost 48¼, and May hard red spring wheat fell 47½.
Corn futures had a lower weekly close for a second straight week caught up in the melt down in the entire grain complex.
After several weeks of being bullish on corn, Jerry Gulke, president of the Gulke Group, bought protection against downside risk in the market.
“We bought July $4.90 puts for 7¢,” he says. “We did an extra 45% of our new crop, which put me at a point where that’s probably the biggest move that I’ve made, but it was cheap. I knew my risk.”
What changed his mind about the corn market after being bullish for so long?
Gulke says it was in large part due to a report USDA released in mid-February prior to the USDA Ag Outlook Forum which was held Feb. 27-28.
The report is released by the Interagency Projections Committee consisting of the World Outlook Board, Economic Research Service, Farm Service Agency, the USDA Chief Economist, OMB and RMA, among some others of lesser importance.
The outlook is model based and done for budgetary purposes and assumes normal weather conditions to come up with baseline predictions.
“What they used was the October WASDE report,” he explains. “Then, from an economics viewpoint, they used the economic conditions as they saw them in late August. And you and I have been talking about that, the markets bottomed in late August.”
Gulke says that report was released last week.
It showed expectations for 2025/26 of 92.0 million planted acres of corn, 182-bu. yield, demand at 15.06 billion bushels, yielding an ending stocks figure of 2.269 billion bushels.
Fast forward to Feb. 27 and USDA adjusted the numbers for the Ag Outlook Forum raising prospective corn acreage 3.4 million acres from last season’s final to 94 million.
With a yield of 181 bu., the agency also projected a record corn production estimate of 15.59 billion bushels and an increase in ending stocks by 425 million bushels to 1.965 billion bushels.
Gulke says with the committee and USDA both using data from August and October of 2024 the numbers are not current and could be inaccurate because corn prices hit their contract lows late in August.
Additionally, he says it is worth considering whether the Trump administration’s Department of Government Efficiency (DOGE) should evaluate the return on investment of such an analysis, given the four months required to gather data and produce a report.
Gulke says USDA has missed the market on these same figures in the past.
He points out that one year ago the report suggested corn planted area of 91 million acres with a yield of 181 bu. for crop year 2024/25 — the one we are in now.
Ending stocks were projected to be 2.616 billion bushels with total demand of 14.56 billion bushels.
In the final report in January, corn acreage settled out at 90.6 million, yield was at 179 bu. with ending stocks at 1.535 billion bushels and demand at 15.115 billion bushels.
Gulke says this leaves him skeptical about the accuracy of USDA’s projections for the new season.
In fact, he thinks corn acreage could be higher than 94 million and closer to 96 because the corn:soybean ratio shifted from 2.357 in late August to 2.25, with crop insurance favoring corn.
With that in mind, and the inability of nearby corn to close above $5 after several attempts, it signaled to him a top was forming.
Did the tariff news or the turmoil between President Donald Trump and Ukrainian President Volodymyr Zelenskyy have anything to do with this week’s sell off in corn and the rest of the grain and oilseed complex?
Gulke says he’s not so sure, and that’s not what the stock market signaled with its recovery late in the day on Friday.
For more information contact Jerry at info@gulkegroup.com.
