For the week July corn was down 16 ½ cents, December corn was 11 ½ lower, July soybeans lost 9 ¾, November soybeans gained 2 ¼, July soybean meal was $2.10 lower, July soybean oil soared 374 points, July soft red winter wheat dropped 35 ¾, July hard red winter wheat fell 32 ¼ and September hard red spring wheat was down 21 ¾.
Corn Posts Lower Weekly and Monthly Closes
Grain markets were lower for the week but corn and wheat also posted lower monthly closes.
Jerry Gulke, president of the Gulke Group, says the lower monthly close in corn is especially significant because the market failed to close above the April high.
“We failed miserably, actually, because May is over with and from the high on May 13 to the low today, we’re now 33 cents per bushel lower,” he explains.
Gulke says this failure was in reaction to the China summit outcome and disappointment with the White House fact sheet that indicated the trade framework contained various holes.
“When the market participants initially saw the $17 billion of U.S. agricultural purchases by China over the next three years, they thought it was a big deal. Some even got out of their hedge positions and went long only to find out it wasn’t even as good as the Phase One deal,” he says.
How Low Will Corn Prices Fall?
Now that the corn market has lost 33 cents per bushel from the May highs, how low will prices fall?
Gulke says, “Quite frankly, I don’t know. You know, there’s some chart points on there that you can look at. But when I look at a chart point, I say, what made that low? And I think today we need to really take a look at this.”
He says since it was the last day of the month people were repositioning and rolling into other contracts and so the move could have been exaggerated.
“I think there were some massive reversals today. We traded higher on Thursday and then on Friday started out decently but turned lower and collapsed. So, I think we need to really see how June starts out,” he adds.
In June, he will be watching to see if corn tests the May lows or takes out those chart areas. Or if weather can trigger a recovery.
Areas of the Western Corn Belt and even parts of Northern Illinois are dry and Gulke says a weather rally is not out of the question if it gets worse. “If you can go back up in corn and stay within the May trading range, the market will have a decision to make about whether or not it really needs to buy old crop corn during July and August in preparation for the fall.”
Growing Carry in the Corn Market
Gulke points out there is a growing carry in the corn market as March 2027 corn was 48 cents above July on Friday.However, he thinks farmers that are still storing old crop corn should avoid the temptation of buying it back and rehedging out into March.
“If we can’t sell more corn to China at today’s rates, what makes us think we’re going to sell it at a higher price for December and then March at $.48 a bushel higher? Then ask yourself, what’s it going to take now to make corn stay at or above that carry into March when we come into March?It’s a tall order,” he explains.
The key now, according to Gulke, is to be on the right side of the market when it turns.
However, it is early in the growing season and there are still questions about yield and acreage to be determine.
“So, I think we need another 30 days to really determine how good or how bad this yield is.It’s unfortunate that we’re here, but I think we have to learn something from it especially if you got caught in the trap about the sky is the limit with China,” he explains.
Funds Exiting Long Corn Positions
The pressure in the corn market was also confirmed by Friday’s CFTC Commitment of Traders report which showed managed money traders as of last Tuesday were liquidating long positions.
Yet, Gulke says funds are still extremely long in new crop contracts, likely tied to optimism about the China deal.
“I think in new crop corn, they’re long something like 330,000 contracts. That’s huge.They’re still net long, they didn’t liquidate completely and that’d be a tall order for them to do that 30 cents lower than what they could have done just 10 days ago or 15 days ago,” he adds.
So the hope is that will provide some support, at least for December corn.
For more information you can contact Jerry at info@gulkegroup.com.
