For the week December corn was down 30 ½ cents, November soybeans plunged 40 ¾, December soybean meal fell $23.50, December bean oil gained 78 points, December soft red winter wheat lost 20 ¼, December hard red winter wheat fell 26 3/4 and December hard red spring wheat dropped 15 ¼.
Grain markets were lower across the complex this week.Funds took to the sell side after disappointment from the outcome of the China summit, plus the 173 million bu. of additional corn USDA found in the quarterly stocks report.
Price Drop Costly for Farmers
Jerry Gulke, president of the Gulke Group, says the 20 cent loss in corn on Wednesday alone cost farmers raising 200 bu. an acre corn a whopping $40 an acre.
“That’s almost twice the cost of my diesel fuel for the whole year, even at these high prices,” he says.
The losses drive home the importance of risk management through the use of futures and options.
“There were plenty of opportunities to help mitigate that price pressure that we’ve had and that’s what risk management is all about. You don’t have to be perfect. You just have to choose where you can gain another $1 or $10 an acre as the market gives you those opportunities,” he explains.
The rally in corn and soybeans to new contract highs in September offered farmers some of the first profitable price levels they’d seen in several years. Farmers that took advantage of the rally to hedge have been rewarded.
However, for those that did not Gulke says they need to be more disciplined in maximizing their gross income to help offset the higher costs and input prices.
As a farmer, he understands how difficult it is to hedge a crop when you have production problems or believe the crop is shrinking. “But the market doesn’t care what you and I think. Somewhere along the line you have to reassess what it was you did wrong, so you can market better next time,” he adds.
Did Farmers Miss Their Opportunity?
December corn futures closed below the $5 mark on Friday at $4.97 ¾.From the contract high of $5.49 ¾ scored on Sept. 2 the market has corrected nearly 50 cents.November soybeans closed at $12.78 ¼ and are more than 55 cents off the contract high of $13.35 ¼ hit on Sept. 11.
Gulke says the highs are in those markets for the year and farmers may need to wait until early 2027 to see whether or not Brazil has any production problems tied to the Super El Nino or China actually buys some U.S. corn as part of the pro-rated $17 billion of other agricultural goods they have committed to buy.
Charts Foretold the Highs
The charts and price action signaled the lows on June 30 and the highs in corn and soybeans prior to this week’s pullback.
“Technical analysis gets a bad name, but it is just the analysis of what the price has been doing. It can signal tops and bottoms,” he says.
Gulke says they followed those sell signals despite all they bullish hype tied to the China summit or corn yield cuts in the September WASDE.
“I am going into harvest, not 100% sold in cash, but we are pretty close to that in futures and options.That gives me the ability to lift my hedges and ride that wave next spring,” he states.
For the first time in a long time Gulke says they sold 2027 corn and soybean contracts.“It’s been a long time since I’ve done that because we haven’t had the opportunity. So when it presented itself, we took advantage of it,” he adds.
For more information contact Jerry at info@gulkegroup.com.
