For the week March corn futures ended 5 ½ cents higher, March soybeans gained 7 ½ cents, March soybean meal was up $.30 per short ton, March soybean oil lost 13 points, March soft red winter wheat tacked on 23 ¼ cents, March hard red winter wheat surged 25 cents, March hard red spring wheat was up 12 ½ cents and March canola gained $18.70.
Grains pulled back on profit taking Friday but ended higher for the week across the complex, despite the uncertainty tied to trade, tariffs and weather.
Jerry Gulke, president of the Gulke Group, says grains took a pause Friday in preparation for the February WASDE.
However, he’s optimistic about the bullish tone to the grain market, especially as corn still digesting the shock of the bullish cut to ending stocks in January to 1.54 billion bu.
The February report is normally benign, but he thinks USDA may have to raise corn demand with the robust ethanol grind and strong exports which could further tighten ending stocks at or below 1.5 billion bu.
Meanwhile he expects soybean and wheat carryout to remain relatively flat.
Gulke says the grain market is in a critical price discovery process entering the 2025 planting season.
“The job of the market is to set a price that gets U.S. farmers to maybe plant more corn and overproduce to keep prices reasonable for end users,” he says.
However, with the tight carryout for corn, Gulke points out the market doesn’t have much room for error if there are any weather problems.
“It could take 94 to 95 million acres for the corn market to feel comfortable in the upcoming season, but any weather issues this spring could jeopardize that.There are also some issues with South America’s crop and so it would not take much to spark a bigger rally,” he says.
Crop insurance base prices are set in February and that could also have an influence on some planting decisions and how much corn is planted this spring.
“The first implication is I can make money raising corn and I can even guarantee myself I’m going to make money raising corn no matter what kind of a farmer I am,” he says.
Gulke thinks the soybean market has priced in the large South American crop and the worst-case scenario on tariffs and a trade war with China, Mexico and Canada.
Surprisingly, the grain markets are trading without much fear regarding tariffs and retaliation and Gulke thinks that’s because there is a view that Trump’s trade policies so far are working in favor of the U.S. and in the end could be good for U.S. agriculture.
The optimism coincides with the position the managed money funds are holding in corn as the latest CFTC Commitment of Traders Report showed speculative traders are long over 364,000 contracts, and they are also long 57,000 contracts of soybeans.
Gulke says he’s not worried about how long the fund traders are in corn and in fact thinks they could defend that position for a while.
“Look at how long the funds stayed near to record short in the corn market through 2023. They have more staying power than farmers do,” he explains.
For more information you can contact Jerry at info@gulkegroup.com.
