For the week September corn was down 6 ¾ cents, December corn fell 5 ¼, September and November soybeans both dropped 2 ¼, September soybean meal gained $5.40, September soybean oil lost 177 points, September soft red winter wheat fell 2 ¼, September hard red winter wheat slid 1 3/4, September hard red spring wheat gained 4 cents.
Corn Holds August 2024 Lows
The corn market closed lower on Friday and for the week but there was at least one silver lining in the technical action.
Jerry Gulke, president of The Gulke Group, says corn although December made new contract lows on Wednesday the victory was the lows set in August of 2024 held.
Last year the corn market put the low in August 28 as the market capitulated on massive farmer selling before harvest and first notice day, plus the prospects of a large crop.
“We turned around and the market gapped higher in September and then we had about a six-month rally in corn of about 70, 80 cents.I believe it topped out in February.This week we went back down to that very same level again and it held,” he explains.
So, he says there is a good probability history could repeat itself in 2025.
“September is 20 cents discounted to December. So, at the end of August now, when we switch to first notice day for September, we’ll switch to December as a lead contract in the continuous month. That’ll give us another gap like we did last year,” he adds.
If that happens Gulke says producers need to take advantage of it.
Is The Most Bearish News Priced into the Corn Market?
The pressure in the corn market through July and early August has been tied to the fear of record yields.
Private yield estimates have ranged from 184 to 190 bushels and the market has been pricing that in ahead of USDA’s yield and production estimate to be released in the Aug. 12 WASDE.
USDA’s August projection doesn’t include field surveys and may not fully account for pollination and disease issues or crop damage tied to hail, flooding and wind from two recent derechos.
Tariff and trade uncertainty also loomed around the Aug. 7 tariff deadline but that has also come and gone.
So, Gulke says it is possible the most bearish news has already been factored into the market.
Corn Demand is Picking Up
The good news is that corn at the $4 level has represented value for end users and demand has picked up.
“Weekly exports on corn were nearly 3 MMT, I can’t remember the last time I saw a number that high.We’ve also been getting some fairly regular flash sales,” he explains.
Is Corn Demand Enough to Offset Record Yields
Gulke says the problem is demand is not robust enough to offset a record yield above 184 bushels, which is the average trade guess ahead of the WASDE.
“That would be a three-bushel yield increase which translates to 240 million bushels of extra corn the market has to digest,” he states.
If the yield is even higher than 184 bushels, it could push ending stocks over 2 billion bushels.
“The problem is if that’s true and we don’t raise demand, then we’re going to have carryover that’s going to plague us as well,” he says.
Marketing Advice
Gulke says going into August his firm was about 75% to 80% hedged, even instances of 100% hedged in corn going into August.
“And we lifted hedges on corn for a profit but have yet to go long in the futures or options.So, I’m naked in the market with no coverage,” he says.
At this point he says it is unlikely the U.S. will not have a monster crop and so farmers that did not sell any grain yet must look at their options including capturing the carry in the market.
“So, what you’ll hear now is say, well, if he didn’t sell any grain earlier, and you have to sell it out of the combine, be prepared for a re -ownership. And they’re going to say to sell the cheap corn and buy a call. You know, that’s just throwing good money after bad, I think. So, there’s other ways of doing it, but it takes on -farm storage. That’s why we do it.”
For more information contract Jerry at info@gulkegroup.com.
