For the week May corn closed 3 ¾ lower, May soybeans gained 4 ½, May soybean meal was down $.10, May soybean oil was up 82 points, May hard red winter wheat lost 11 cents, May soft red winter wheat fell 9 ½, May hard red spring wheat was down 2 ¾.
Old crop corn futures closed lower for the week, a move the market hasn’t seen for seven weeks and left some analysts to describe the market as “tired.”
Jerry Gulke, president of the Gulke Group, says he is not in that camp because there is nothing that has changed in the corn market fundamentally except a pick-up in farmer selling.
“You would naturally think there’s going to be a setback of some sort with the strength that we’ve seen going on and on again. There’s a lot of farmers wanting to, if they’re going to sell, they’re probably, if they’re not snowbound, they’re probably going to try to move some more corn, but nothing really changed.,” he says.
He thinks the bull market may just be taking a pause to refresh and he hasn’t changed his bullish stance.
“I’m willing to have some patience,” he adds.
Technically, both the May and July corn contracts stayed above the $5 mark this week which was a strong signal to Gulke.
March ended below $5 but he’s moved away from that contract as volume is dropping as traders are rolling out of the contract ahead of first notice day.
“I think this is one of the first weeks we haven’t closed higher for the week, but we didn’t destroy things on the chart too much.Especially when you look at it from a monthly and a weekly standpoint, a little longer term, things still look good,” he says.
Plus, speculators are still bullish corn and continue to buy.
Commodity funds increased their net long position as of Tuesday’s CFTC Commitment of Traders Report.
On a futures only basis they bought nearly 34,000 contracts, increasing their net long to 359,733 contacts.
Index funds, according to Gulke, added another 5000 contracts to their net long position which now stands at 490,000 contracts.
The one new piece of information the market will be watching next week is the projections for corn acreage in the USDA Ag Outlook Forum on Feb. 27-28.
Ahead of the meeting several private firms released their acreage estimates in the range of 94 to 95 million acres, a large increase from the 91 million USDA projected to start the last growing season.
Gulke sees USDA remaining conservative in their acreage estimate with an increase of two to three million corn acres and reminds farmers these are just projections based on their past economic models.
If the agency raises corn acreage only two million acres he says that will not be enough to raise ending stocks much above the current 1.54 billion bu., and that’s even if they use a trend line yield.
That’s because of the big increase in demand from last season and Gulke says USDA will not adjust exports based on the threat of tariffs.
“I don’t think they’re going to adjust the demand side much because of the tariffs really haven’t really been in place yet,” he says.
However, he doesn’t put too much stock into the numbers and is waiting for the USDA Prospective Plantings Report to be released on March 31, which is derived from farmer surveys.
For more information you can contact Jerry at info@gulkegroup.com.
