For the week May corn was up 12 cents, December corn gained 15, May soybeans soared 30, November soybeans were 18 ½ higher, May soybean meal lost $3.30 per short ton, May bean oil surged 473 points, May soft red winter wheat was 25 ¼ better, May hard red winter wheat tacked on 43, May hard red spring wheat was 13 higher.
Grain Rally Not Tied to War
Grain futures were all higher for the week and posted new highs for the move and for the calendar year on Friday.
Jerry Gulke, president of the Gulke Group, says while many analysts are pointing to the rally in crude oil and the war in Iran as the reason for the strong grain performance, he thinks the breakout was brewing long before that.
He thinks its the early signal of a longer-term bull market, and it would have also happened with or without President Trump’s use of tariffs as a negotiating tool for trade.
“If you think about it, all this is happening even after the Supreme Court said the tariffs were invalid. So that convinced me that my assessment was correct and that this was going to happen with or without tariffs,” he explains.
Stars Align in the Grains
Gulke says the stars had been aligning in the grain markets for some time.
He observed a paradigm shift happening in the way the U.S. did business in the world in August 2024, even before President Trump was elected.
“The tariffs and all that just added to the fact that we want people to buy more from us. We want a level playing field and we’re going to do more internally.”
He says Trump administration trade officials speaking at the USDA Ag Outlook Forum reinforced that agenda. “If you recall they said we need to do more domestic production and walk products off the shore, so to speak.
Sell people parts of animals, not the whole carcass, sell them ethanol, not the corn for them to make ethanol, and so forth. ”He says if adding value to raw commodities is kept in the United States money can be made by giving people jobs and selling more goods.
Gulke believes this is showing up in the record pace of U.S. corn exports which year to date now total 2.556 billion bu., up 31% from the previous year.
However, he thinks even the soybean market is starting to take notice of the record crush pace.
This helps explain the recent parabolic move in soybean oil.
Demand has been strong for all vegetable oils for use in global biofuels production, including palm oil and canola.
He says if soybean crush stays at its current pace USDA will need to raise its crush projection by 70 million bu. and would put ending stocks down to a tight 280 million bu.
Grains Surprise the Trade Making New Highs for the Year
Last week corn, wheat, soybeans and bean oil posted higher monthly closes.
The continued strength and new highs for the year in the month of March have been contrary to what many in the market were expecting he points out. “We’re three months into the year and the insurance has passed. Pretty interesting. And I’ve been around long enough to see this happen before. And it looked very bullish to me 18 months ago. It just took time to transition.”
Market at a Crossroad
For example, looking at a long-term soybean chart, he thinks the market is at a crossroads. “We’ve rallied now to the point where there’s a long-term downtrend that started four years ago. And if we can break that long-term trend, it says something truly has changed for the outlook of soybeans beyond $12. We’ve been to $17 before.”
He says the key is to be on the right side of the market when that breakout rally happens.
Gulke adds that weather could be another catalyst especially with the expanding drought on the U.S. Drought Monitor.
Conversely, with the quick transition from La Nina to El Nino there could also be some areas that see a wet spring and planting delays.
Should Farmers Sell?
Gulke says they, like many farmers, did sell some old crop prior to this rally for cash flow purposes.
So, scale up selling as the market rallies to meet cash flow demands is warranted.
However, there is still a lot of grain in storage.
He says most bankers that have met with farmers to secure an operating loan for 2026 are likely more focused on selling the farmer crop insurance to guarantee the loan, rather than requiring the farmer to have a marketing plan in place.
Gulke wrote to clients this week that in these volatile environments it is even more difficult to know when the top is in the grain markets and when you should be selling grain or forward pricing new crop bushels.
He says now that the February crop insurance guarantees have been set if the market is concerned about not having enough soybeans, wheat or corn, then prices need to go up to curb demand, or farmers will switch acres last minute.
Acreage Battle?
Corn acreage was already expected to be down and with higher fertilizer prices due to the war in Iran.
Add to that the possibility of China buying another 8 million metric tons of old crop soybeans at the April summit in Beijing and Gulke says that could fuel a late acreage battle.
However, currently he says the market is indicating it does care.
“I did an analysis and with the rise in corn prices since the first of the year, we’ll say, we’ve gained about 40 cents in corn, so about $80 an acre in corn and we’re at about $50 in soybeans. So, corn has not lost its impetus to want to hold those corn acres.”
Gulke doesn’t think the higher fertilizer prices will make a big difference on corn acreage.
“A lot of that fertilizer was bought ahead of time and if you didn’t get it all bought the market just gave you money in the price to help offset that delta increase in fertilizer by maybe a factor of two. I don’t think the cost of fertilizer and nitrogen went up $40 an acre.”
On his own farm Gulke has changed some acres around and is planting more soybeans this year. “Soybeans now, to me, are about a $40 an acre better deal than what corn is. A lot of people won’t agree with that, but that’s how we farm, and it works for us.”
For more information or to attend the Gulke Group’s annual seminar at the end of this month you can email Jerry at info@gulkegroup.com.
