For the week September corn was up 5 ¼ cents, December corn gained 6 ½, August soybeans were 12 ¾ higher, November soybeans were up 12 ¼, August soybean meal was $.20 lower, August bean oil surged 435 points, September soft red winter wheat rallied 42 ½, September hard red winter wheat soared 56 and September hard red spring wheat was up 41.
Grain markets were higher across the complex for a second week continuing to put the June 30 lows in the rear-view mirror.
Jerry Gulke, president of the Gulke Group, has detailed the last two weeks how they exited their short hedges in June before the USDA Acreage Report.
“From a monetary standpoint, we actually got out of our hedges and went along some calls.”
He took that action as the charts indicated a low was in the process of being formed.Now the market is moving higher, a rare time for grains to be rallying, but the big questions on farmers’ minds now are how high will prices rally and should they sell or hold?
How High Could the Markets Rally?
Several factors have finally converged to provide a catalyst for higher prices, including Black Sea wheat export disruptions, weather and China starting to buy U.S. soybeans.
Gulke thinks the markets must first take out the May 13th highs, as that was when September hard red winter wheat made a new contract high of $7.58 ¾.Wheat made a run at that price on Friday and failed.
The corn and soybean markets tried to attack the June highs and were turned back as at least in the case of corn that price was met with some farmer selling.
Gulke says bull markets are very hard to manage once they go straight up.“I look back at the charts and we’ve been here before about two years ago in 2024 we hit the same level we are now in wheat. We could take it out and we’ve been sideways for the last two years,” he explains.
Fundamentals Align for Wheat
Gulke says the fundamental reason the wheat market turned around is starting to surface.
“We’ve got problems with the crop in France. We’ve got problems if that high pressure goes into Ukraine and Russia, then there’s more problems,” he explains.
However, the bigger problem now is tied to wheat export logistics problems in the Black Sea.“We didn’t kill any wheat with what Putin’s been doing and what Ukraine’s been doing. But this thing got a little hotter.”
Attacks have escalated by both sides over the last two weeks shutting down the Strait of Kerch to exports and Russia has damaged key Ukraine export facilities.
Gulke thinks if Putin believes Russia is losing the war he may ramp up the fighting and try to totally shut down Ukraine’s ability to export.
“So now we’re finally at the risk of what goes on in that war over there.”
The duration of the Black Sea war and export disruptions will determine how high prices will rally.
Should Farmers Sell or Hold?
So, should farmers sell this rally or hold for higher prices?
Gulke says they did a great deal of research and analysis of various market signals to determine when the market would bottom and also looked at the psychological value of the marketplace.He says that is the same way they will pick a top.
He is watching the charts and the position of the managed money.He says large speculative funds have not been long in the wheat market for several years.
“If the large spec is going to change his attitude about wheat and be net long then you have to say what do they know that I don’t know?”
For him, that will be a good sign the market is going higher.
So, right now Gulke is long on paper and is holding and waiting for higher prices.
“We talked about this two months ago, that we just have to be patient here. This thing is evolving in the way we thought it was. When we decide that it’s time to start dumping grain I want to see some kind of signal that’s just the opposite of what we saw when the market turned around in June,” he adds.
Have a Marketing Plan
Right now he advises farmers to hold on to their grain and set some targets as part of a marketing plan to help them decide when to sell.
Gulke says when a bull market is rallying it can get volatile and too emotional.
“If you multiply 30 cents times 80 bushel an acre on spring wheat or winter wheat and if you miss the rally by a day all of a sudden it can seem paralyzing to make a decision. It’s very hard to do, I know from experience. But it becomes a personal decision, and you don’t go broke making money,” he concludes.
For more information contact Jerry at info@gulkegroup.com.
