For the week, grains were lower with July corn dropping 18 ½ cents, December corn fell 21 ¾, July soybeans lost 43 cents, November soybeans slid 35 cents, July soybean meal was $21.80 per short ton lower, with July soybean oil up 57 points. July Chicago wheat was down 18 ¾ cents, July Kansas City wheat fell 12 ½ and July Minneapolis wheat finished 11 ½ cents lower.
Grains posted lower closes for the week with some end of the month profit taking but farmers may have been rewarding the market with sales. The technical action though may be signaling a technical top in the markets according to Jerry Gulke, president of the Gulke Group. “Corn took a real hit this week.”
He says the grain complex opened sharply higher on Monday night, following the long Memorial Day weekend, with some contracts gapping up based on U.S. and global weather concerns. However, corn and soybeans ended lower on Tuesday and wheat well off its highs, with corn contracts putting in key reversals. “And we went down every day after that.”
Technically, Gulke says the short term up trendline line in corn started about the middle of April. However, weather rallies can be fleeting and this week there were sell signals in the grain market.
“Bull markets based on weather usually last about six weeks and top before you run out of good news. This one started about April 15 and we’re ending it at the end of May. So, that’s about five to six weeks.” he says.
Gulke says they also sold a lot of old crop wheat at the end of last week and this week.
He says the technical action in wheat was interesting, “Usually in a bull market if a rally lasts six weeks, you’ll get three major moves up. If you look at a July Chicago wheat chart you have three moves higher. It went up and took out that third wave but couldn’t close above it after two or three attempts.”
That technical failure may indicate the wheat market had priced in all the current fundamentals including the lower crop in Russia.
Soybeans, according to Gulke, also hit chart resistance and consolidated. However, that market was not able to achieve a 50% retracement rally. “I think if China had been buying some of our beans we would be able to do that. We got up to $12.50 and there was a lot of selling. And today we had a key reversal down in July soybeans and November soybeans.”
Fundamentally he says the down week in grains may have also been traders recognizing the moisture situation has improved for the row crop areas. “I think we’ll see headwinds for the market until we get into the end of June and traders gets nervous about the acreage figures from USDA,” he adds.
The stock market also had a lower week and was volatile on Friday which Gulke says may have been tied to former President Trump’s legal action. However, end of the month position squaring can’t be ruled out, as well as inflation and interest rate concerns. Friday’s Personal Consumption Expenditures or PCE was up .3% for the month and up 2.7% from a year ago.
For more information contact Jerry at info@gulkegroup.com.
