For the week, September corn was down 8½ cents, December corn lost 9¼ cents,
August soybeans slid 61¼ cents, November soybeans plunged 64½ cents, August
soybean meal fell $18.40 per short ton and August soybean oil dropped 290 points.
September SRW wheat fell 39¾, cents, September HRW wheat lost 31¼ and
September Minneapolis wheat fell 29¾ cents.
Corn futures closed lower for the week, but the December contract scored a daily
key reversal, making new lows and then ending higher in reaction to the July World
Agricultural Supply and Demand Estimates.
“We closed near the high of the day in December and March corn, which may
suggest we have finally put some lows in the market,” says Jerry Gulke, president
of the Gulke Group.
For the last several reports Gulke has been expecting USDA to lower carryout due to
better-than-expected disappearance, but USDA reported just the opposite in the
June 28 Quarterly Stocks Report.
In a bullish surprise, corn finally disappeared in the July WASDE as old crop ending
stocks were lowered 145 million bushels from June to 1.877 billion bushels.
New crop ending stocks also fell below 2.1 billion bushels, which was well below
trade guesses.
“They raised the feed usage and they actually increased exports,” he says.
Yet, Gulke is skeptical about how USDA arrived at their numbers.
“We aren’t feeding more cattle so it’s mostly likely USDA is making up for some
disappearance that should have been accounted for in past reports,” he explains.
He believes USDA needs to cut another 150 million bushels in the future.
The corn market fell too low, Gulke says, under speculative selling pressure as fund
traders knew farmers were holding nearly three billion bushels of corn in on-farm
storage.
“That cost producer millions of dollars,” he says.
According to Gulke, the technical signals indicate to him he should not be holding
short positions in the corn any longer.
However, even if the corn market has bottomed, how much upside potential is
there?
“Technically we will see chart resistance at $4.40, which is a big target, but we will
also struggle to get above $4.20 first,” he explains.
Gulke says the key to how much the corn market can recover is tied to just how
much old crop inventory is still in farmers hands because any rally will bring those
bushels to market and cap rallies.
For more information contact Jerry at info@gulkegroup.com.
