For the week September corn was down 24 ¼ cents, December corn fell 24 ¾, August soybeans plunged 51 ¼, November soybeans lost 42, December soybean meal fell $8.60, December bean oil lost 102 points, September soft red winter wheat was 11 3/4 lower, September hard red winter wheat fell 11 ¾, September hard red spring wheat sank 35.
The grain markets had an ugly week lower with new contract lows in corn on Friday, even after a slightly friendly July WASDE.
Jerry Gulke, president of the Gulke Group, says the grains markets were pressured by ideal weather.
Grains Fall as “Rain Makes Grain”
Many areas of the Corn Belt continue to see timely rains. Even Gulke’s farm in Northern Illinois, which had been dry, received some much needed rain this week.
“We got anywhere from two inches to five and a half inches,” he explains.
He says that should translate improved crop conditions in Illinois after the fairly low crop ratings this week at 68% good excellent on corn and only 54% on soybeans.
While USDA did not increase corn yields in the July WASDE, many models this week were raising corn yields well above their 181 bu. trend line prediction. So, the market was already looking ahead in anticipation of increased yields in future reports.
August is when USDA is likely to make its first adjustment to yield and Gulke thinks it will be a conservative increase of one to two bushels on corn but that will still increase the carryout.
Gulke says that’s why the market ignored the cut in corn ending stocks in the report to 1.3 billion bu. for old crop, and 1.66 billion bu. for new crop.
“I doubt that 1.6 billion gets reduced much, and it may even trickle higher,” he says.
USDA Acknowledges Strong Demand in WASDE
He says at least the agency acknowledged the stronger old crop demand by raising corn exports 100 million bu. to a record 2.8 billion bu.
“They did lower the feed and residual, which everybody expected, and with cattle on feed less, that’s probably going to happen a little bit more,” he explained.
However, current demand won’t be enough to offset the larger crop size according to Gulke, especially with renewed fears of tariffs and the lack of progress on trade deals.
“We have India, for example, and others that are pushing back on the idea about embracing agriculture because they have their own agriculture people to support. India is one of them. Canada would be another one. And so when you hear some of the details that are released, agriculture is kind of missing,” he adds.
Gulke says even the improved outlook for domestic soybeans demand driven by more favorable biofuels policy is currently not enough to make up for lower export demand without a deal with China.
Will the Market Bottom Early in Anticipation of a Record Crop?
Gulke doesn’t think corn or soybean prices need to go as low as they did in 2024 and the market could bottom earlier.
He says it’s partially because demand is picking up at lower prices or value levels, but also because of who is holding the grain this year.
Commercial interests own more old crop grain versus the farmer and that will help give farmers more leverage on price with the new crop.
“When it comes time for holding the grain when we first start harvesting that capitulation won’t be there to the extent it was before,” he says.
However, he says the lows probably aren’t going to happen in July unless the weather makes a 180 degree turn.
For more information contact Jerry at info@gulkegroup.com.
