For the week July corn was down 4 ¾ cents, December corn fell 5 ¾, July soybeans lost 8, November soybeans were 5 1/2 lower, July soybean meal slid $7.20, July bean oil gained 16 points, July soft red winter wheat was up 4 ½, July hard red winter wheat gained 13 ¾, July hard red spring wheat was 2 lower.
Corn and soybean futures were lower for a second week as funds continued to liquidate on the lack of bullish news.
Jerry Gulke, president of The Gulke Group, says the pressure started with the disappointment about the results of the China summit in mid-May. The White House fact sheet stated China would buy 25 million metric of soybeans and $17 billion of additional agricultural goods annually for the next three years.
However, the fact sheet lacked details and has not produced any Chinese purchases which caused the funds to liquidate their long positions in many sectors of the ag markets.
“Apparently, they looked at the same thing that I looked at and were disappointed. The summit could have changed things significantly going forward,” he says.
Grain Markets Forge Highs in May,
Markets like corn and soybeans made higher highs in February, March and April until the highs were struck around May 13.
While Gulke thought the highs were in, he was not expecting funds to liquidate this hard and for the grain markets to fall this far, this fast.
Corn Correction Surprises
Gulke says the biggest surprise was the drop in corn prices.
“It was May, not July. Corn is kind of made after the 4th of July and if you get a three-inch rain you’ve got an 85% chance of getting another record crop. However, when the market turned, it went South and went South in a hurry,” he says.
Gulke explains that bull markets are hard to handle because of the psychology involved. “It will go up and you’ll sell grain. Then it’s a dime higher and you’ll say, I knew I should have done it, but I’ll sell a little more. So, you sell a bit more. The goal is to be sold out at the top but it isn’t cheap because the last 10% to 20% you sell, you’ll have to pay margin calls.”
Now, he says the corn market has fallen and taken away all of the gains made in 2026. “So, we can complain about fertilizer and chemical prices and then we let $100 an acre slip by at least, and we still have the high cost.”
Soybean and Wheat Also Correct
Soybeans also corrected but fortunately Gulke says the market did not fall as much as the corn. “Soybeans went down about half of what they gained since January 2 and a 50% retracement makes some sense.”
Wheat fell as well but because of the poor crop it stopped at the April lows which is important according to Gulke. “We watch to see if the market takes out the previous month’s lows because if those areas don’t hold on the charts the rally is over, at least for the time being,” he adds.
What Could Save the Market?
1. Weather
Gulke says there are still unknowns about the weather forecast for the rest of the season.If heat or drought returns after the 10-to-14-day forecast, it could turn the market around especially with the prospects of lower acres in the June 30 Acreage Report.
“If we start to get dry and you drop a bushel or two off the 183 bu. per acre trendline yield on corn, which tightens things up a little. For every million acres, you get 180 million bushels of corn,” he states.
USDA is also assuming trendline yield on soybeans at 53 bu. per acre but with a 310 million bu. carryout on soybeans there is very little wiggle room.
Currently, the weather looks more favorable, and many areas have got rain that needed it, including Gulke’s farm in Northern Illinois.
“We got four inches of rain in three days this week, and now it goes from rags to riches. We got rain in North Dakota, Minnesota, and a lot of places that need it and got it. But it’s still June,” he says.
2. China Buying
If China was to start purchasing U.S. agricultural products Gulke says it would also support a recovery in the grain markets.
“China is going to buy that 25 million metric tons of soybeans.It’s just a matter of how they’re going to do it and how shrewd they are.It makes total sense for them to buy our beans even though they’re more expensive than they are in Brazil.”
Gulke says that’s because China has more to gain by buying U.S. soybeans to gain access to U.S. consumers and achieve lower U.S. tariffs on their goods.
Farmers Should Hold at These Low Prices
Now that July corn has lost nearly 65 cents from the mid-May highs, July soybeans dropped by $1.25 and hard red winter wheat is down over $1.15, Gulke thinks farmers should refrain from sales.
“You’ve got to hold here, in my opinion as these prices are no longer profitable,” he says.
However, the crop insurance base prices will serve as a pseudo floor for grain prices. Plus, Gulke thinks additional Farmers Bridge Assistance payment could be in the works as President Trump has been talking about another round of aid.
“If it gets much worse, you know, Trump’s still got to go through the election, and he could pull a rabbit out of the hat yet. But right here, I’d rather take a risk and let the market tell me whether it’s going to hold in here or not,” he explains.
Grain Markets Close to the Lows
Still, Gulke thinks the grain markets are close to their lows and this week he lifted hedges.
“Yeah, I would say that was my bet. I was short 110% of the beans, 120% perhaps, and at least 100% of my corn and I’m at zero right now. I’m maybe 5% left in beans because the hedges then came back,” he adds.
Gulke like to be 40% sold in the cash market when he’s done planting if the price is right and it make sense to him.
“We’re 40% sold in the cash corn market and beans quite a bit higher than where we are now. So, from here, if I lose another dollar, I’m not losing a dollar on the whole crop. I’m losing 50 cents on what’s left. So, I’ve got staying power once I’ve got that cash contract locked in,” he explains.
He doesn’t sell more than that in May and the first part of June because of the weather that follows that.
“And that’s the beauty about using futures,” he concludes.
For more information contact Jerry at info@gulkegroup.com.
