For the week December corn was down 4 ¾ cents, March corn lost 6 ½, January soybeans were up ½, March soybeans fell 1 ¾, December soybean meal fell $7.40, December bean oil was up 11 points, December soft red winter wheat was ¼ lower, December hard red winter wheat fell 4 ¼, December hard red spring wheat was down 1/4.
Corn Lower for the Week on Report Hangover
Corn ended lower for the week still feeling the hangover from the disappointing yield estimate in the November USDA reports at 186 bu. per acre, according to Jerry Gulke, president of the Gulke Group. He says technically corn collapsed the day of the report and tried to recover early this week but ended up reversing lower. “The market turned around and closed below the 50-day moving average and confirmed that again on Friday,” he says.
Where Does the Corn Market Go from Here?
Gulke says he’s watching short-term technical indicators to determine if the market is going to continue to go lower. “This is the first sell signal in corn we’ve had since the buy signal in October and we’ve had a pretty good rally,” he says.
Gulke was hoping the corn market would repeat last year’s pattern of putting in an early harvest low and staging a sizeable post-harvest rally. He says while corn established an early harvest low it failed to take out the October high and has failed at that level so far in November even with a $1.40 rally in soybeans. So, he’s turning defensive because he says there are a lot of negative spreadsheets this year. “I certainly want to use risk management to protect the downside. And that means short futures or selling some cash for far out July for those that still have grain in the bin and are holding it.”
Soybeans Correct but Still Holding Support
Soybeans reset this week. January soybean futures hit a high of $11.69 ½ and then saw profit taking through Friday morning when the contract hit a low of $11.13 ¼, so a $.56 correction from the high to the low. After a nearly $1.40 rally off the lows, soybeans were overbought and due for a correction.
Gulke says the market had a big reversal higher following the announcement of a trade framework with China.The administration says it includes 12 MMT of soybeans purchase commitments for 2025 and 25 MMT for three years following that.However, the market is an inflection point and needs clarity to move back higher. “The question is still out there about whether they are going to count what they already bought earlier in 2025 towards the 12 MMT, if it’s a calendar year or a marketing year.However, they’ve purchased 1 MMT so far so they are about 10% there,” he says.
He says the big reversal was likely short speculators exiting those positions, but without a current Commitment of Traders report it is impossible to know for sure. Regardless he says, “The market left a gap on the charts when it gapped higher and broke above the top side of the trading range it had been in for 18-months.We’re still about a $1.00 above that breakout point.” So, the market is still in an uptrend, but Friday’s lows need to hold.
Sell Something….
Gulke says soybeans rallied over $1.40 off the lows and there are farmers that have not made any sales because they are hopeful the China trade framework struck by President Trump is going to lead to $12 to $14 soybeans. “It’s very difficult to second guess what Trump’s going to do next. I don’t know,” but he says past experience tells him to make some sales.“ The best thing I found to do is if in doubt, sell something.”
Wheat Disappoints But is it the Sleeper Market?
Both classes of winter wheat also ended lower for the week with talk of a possible peace deal between Russia and Ukraine, a stronger dollar and large global supplies as indicated in the November WASDE with carryout up 7.4 MMT.
The wheat market has rallied several times only to retest and make new lows. However, Gulke says he’s learned over the years that wheat is a market that can turn when you least expect it. “About the time that you get convinced wheat is going to fail and 90 % of us are on that side of the fence, that’s when the wheat will turn around. I’ve experienced it numerous times in the last 30 or 40 years, where we go up a dollar and we’ll say, why in the world did that happen. All of a sudden, the fundamental news finally comes. The market’s turned around and it’s bullish. And then we start hearing the news about why it’s bullish.”
With the geopolitical uncertainty in the Black Sea he says that situation could turn quickly. “If Trump walks away from Ukraine and Europe has to fight their battles, who knows what gets sunk next and whether they start to destroy elevators and ships in the sea. Then the market psychology will change, and traders will say wheat is too cheap,” he explains. That could produce a rally that finally gets the speculators out of their short positions and so he thinks farmers need to be prepared.
For more information contact Jerry at info@gulkegroup.com.
