For the week March corn was down 3 cents, January soybeans lost 32 ½, March soybean meal fell $12.00, March soybean oil was 35 points lower, March soft red winter wheat was down 2 3/4, March hard red winter wheat gained 3 ¾ and March hard red spring wheat fell 5.
Soybeans collapsed on Friday with the January contract $.14 ¼ lower at $11.05 ¼ and also ending down $.33 for the week. Jerry Gulke, president of the Gulke Group, says the close was bearish as it confirmed a head and shoulders top by taking out the neckline at $11.13 and closing below that chart area. In the process, January soybeans also closed below the November low. He says that now opens the door to the $10.80 area or close to a 62% retracement from the October low to the November 18 high of $11.69 ½.
The fall rally coincided with the anticipation and then announcement of a trade truce and purchase agreement with China for U.S. soybeans.On October 30 Treasury Secretary Scott Bessent said the framework would include China purchasing 12 MMT of U.S. soybeans by the end of 2025, followed by purchases of 25 MMT for 2026 -2028.With China absent from the U.S. soybean export program, it was what the market needed to produce a nearly $1.40 rally. Gulke says, “The fall rally is price discovery of all the news that it has come out regarding China, both rumored and actual starting the end of October,”
The November high coincided with USDA confirming a daily export sale of 792,000 MT or 29.1 million bu. of soybeans to China for 2025-2026.January soybeans rallied up to $11.69 ½ but then closed lower and scored a daily key reversal in a classic “buy the rumor, sell the fact” reaction. Gulke says the market has not retested that area due to the lack of clarity regarding details and timing of the 12 MMT of soybean purchases included in the U.S. China trade framework.
This week Bessent added to the uncertainty in a Wall Street Journal interview when he suggested China was on target and would complete its buying program by February 28, once again moving the goalposts and creating the bearish price action. “We needed to see the market go higher and believe that not only are we going to go above $11.80 but we’re going a lot higher because China’s going to buy a lot of grain every week in order to meet their commitment in the next 30 to 60 days. That didn’t materialize,” he says.
Gulke says the daily reversal on November 18 is more bearish when considering the latest update on the CFTC Commitment of Traders Report. The Large Speculative Position (blue bars on the chart) below shows they significantly increased longs the first three weeks of November. “That coincides with talk of China buying and the Gulke Group’s technical system going long, after we first took profits on hedges and then bought the call options,” he explains. The report on December 5 shows specs were already long by the end of October. So, they covered shorts and reversed their net short position going into the October 30 meeting between President Trump and Chinese President Xi and by the time of the meeting were neutral.
When USDA finally gets caught up, Gulke says the report may show large speculators have already started to liquidate and take profits on long positions.Details of the framework and Bessent’s comments on Wednesday are important. He says, “Buying by China may have already taken place and thanks to the inability of USDA to upgrade data quickly, the trade could very well be behind the curve.Price discovery may have already been fulfilled with July futures (Brazil’s hedging tool) hitting $11.80, which is a very good price for Brazil’s 174 mmt crop.”
Price wise, January, July and November futures indicate short-term downtrends and need a significant turnaround to turn positive. As such, he will be closely watching next week’s reports. “The December WASDE on Tuesday should contain better analysis by USDA on demand given framework and administration rhetoric,” he adds.
For more information contact Jerry at info@gulkegroup.com.
