For the week March corn rallied 13 3/4 cents, March soybeans gained 8 ¾ cents, March soybean meal fell $1.10 per short ton, March soybean oil gained 11 points, March soft red winter wheat was 8 cents higher, March hard red winter wheat lost 3 ¼ and March hard red spring wheat was down 3/4 cent.
The corn market made not only new highs for the move on Friday but new highs for the year.
Jerry Gulke, president of the Gulke Group, says March corn took out both the May and June highs in what he is officially calling a bull market.
Gulke says the significant draw down in ending stocks to 1.54 billion bu., continued strong demand and some concerns about dryness in areas of Argentina are all fueling the rally, as well as the push from fund buying and extending their net long position.
“They (funds) stayed short right in the end of August. Now they’ve turned around and we know the longest position for the year was reported last week in corn,” he says.
The CFTC Commitment of Traders Report had funds long over 263,000 contracts in the corn market, but that was before the shock of the WASDE report and so now the funds are estimated to be long over 300,000 contracts.
The underlying strength in demand, according to Gulke, is coming from the “Trump effect.”
Not only did world buyers see the low prices as a value, Gulke says they also were buying ahead of possible tariffs threatened by the new Trump Administration that takes the helm on Monday.
The substantial pick up in corn export demand from customers around the globe, even excluding China, has pushed total exports to 28% above last year.
The next question for the market is can the strength in corn continue and can it pull up wheat or even soybeans, which have been anchored by the record crop projected in South America?
Gulke thinks that’s entirely possible for a couple of reasons.
First, he says farmers will likely plant more corn and less soybeans and maybe even spring wheat in 2025 due to the price ratio.
That will lower soybean production on top of an already smaller 380 million bu. carryout.
“USDA lowered ending stocks on soybeans 20% in just one report,” he explains.
Wheat production would also fall with lower spring planted acres verses 2024, which is price supportive.
However, even with 94 or 95 million acres of corn Gulke says ending stocks could still be below 2 billion bu. and with continued strong demand that will still support corn prices.
Gulke says the other factor is a possible trade deal with China under the Trump Administration.
“Trump likes to make deals, and China knows that he’s only going to be there four years, not eight years. So, they might want to make nice for four years.What if Trump goes to President Xi and says you know, you didn’t follow through on Phase 2 and you need to come back and make up for what you didn’t do?” he says.
Treasury nominee Scott Bessent backed up this idea when he testified this week before the Senate Finance Committee saying he would press China to resume its ag purchases per the Phase 1 agreement.
If that were to happen it could be the start of the next bull market not only for corn but the entire grain complex.
Gulke says wheat has the additional push from historically tight global stocks and emerging crop concerns in Russia.
Plus, funds are still short in the wheat market and slightly short in the soybean futures and if they continue to cover those positions or go long that could also fuel the potential rally.
For more information you can contact Jerry at info@gulkegroup.com.
