For the week, December corn was up 10½ cents, November soybeans climbed 17¾ cents, December soybean meal lost $9.80 per short ton and December soybean oil surged 233 points. December soft red winter wheat lost 3¾ cents, December hard red winter wheat fell 8¾ cents and December hard red spring wheat dropped 11¼ cents.
Corn and soybeans saw some life this week due to a surge in demand. Export sales usually pick up around harvest, but this fall’s business has been above normal.
Corn exports hit 142 million bushels last week, the largest since 2021 and the 5th highest week in 25 years. Soybean exports were also a marketing year high at 79 million bushels and total commitments are now 8% above last year. Even wheat export commitments are up 18% from last year at 481 million bushels.
However, should grain prices be higher considering all of the recent uptick in demand?
Jerry Gulke, president of the Gulke Group, says price performance might have been a little disappointing but that’s because of USDA’s lofty ending stocks estimates at nearly 2 billion bushels for corn and 550 million bushels for soybeans.
“One would have thought there should have been more upside in prices, but the government has made some export projections that might already have this factored in,” he explains.
Gulke says the U.S. is one of the cheapest sources of corn in the global marketplace with prices currently around $4.
“We’re competitive in the corn market for that open window,” he adds.
The string of flash sales of corn to Mexico and other customers the past eight days looks impressive, as well as soybean sales to China and unknown destinations.
However, for this marketing year, Mexico has bought just over 10 million metric tons of corn from the U.S., which is slightly ahead of last year and so right now it looks like routine business.
China has purchased around 10.5 million metric tons of soybeans, which is close to the 11 million metric tons they bought last year.
Yet, Gulke thinks other export customers are buying and front loading ahead of the election with concerns about increased tariffs and a possible trade war, plus South America’s slow soybean planting pace due to dryness.
Will demand dry up after the election and with rains now starting to fall in Brazil and Argentina?
Gulke hopes that won’t be the case.
“I think right now it looks like we’ll see demand continue through December and into the end of February. They got a late start on soybean planting in South America, so I would say we’re the only game in town, and we’re competitive,” he adds.
However, the cash basis is widening out where there have been strong yields and where export delivery points are seeing higher freight rates due to the low water levels on the Mississippi River.
For farmers, Gulke says the key will be to manage risk, capture carry in the futures and watch basis levels in their area.
For more information, contact Jerry at info@gulkegroup.com.
