For the week July corn was 12 ½ cents higher, December corn was up 11 ¾, July soybeans rallied 20 cents, November soybeans gained 16 ¼, July soybean meal surged $17.70 per short ton, July bean oil lost 32 points. July Kansas City wheat was 59 ½ cents higher, July Chicago wheat gained 46 cents and July Minneapolis wheat tacked on 41 ¾.
During the winter months the outlook for the grain markets was about as bearish as it could get, especially for wheat and corn. Jerry Gulke, president of the Gulke Group, says many in the trade pointed to sluggish U.S. demand, a more than 2 billion bushel ending stocks figure for old crop corn and projections for bigger supplies for 2024-25.
Gulke said there was also much discussion about the terrible demand for corn and the fact that China was not buying from the U.S. Yet, the weekly USDA export report shows total export sales have picked up on corn and are running 30% ahead of a year ago.
Despite all the bearish sentiment, corn futures put in a contract low at the end of February and heading into the last week of May have rallied well off those levels. Plus, Gulke says, “The basis has narrowed in corn and the carry from December to July of around 40 cents, that spread has narrowed.”
Wheat has probably been the biggest surprise of the grain complex according to Gulke. “You look at wheat, it was the dog of the bunch, with continued talk that the world had too much wheat and the U.S. would never be competitive, and wheat is up $1.50 from the lows in early March,” he says.
One of few bright spots was the soybean oil market pinned to the hopes of expanding markets for renewable diesel and Sustainable Aviation Fuel.
Gulke says, “The whole idea was where are we going to get enough soybean acres to meet all the demand for soybean oil as a feedstock for biofuels demand and what are we going to do with all the excess meal. In the meantime, soybean oil has crashed and burned, and soybean meal has not.”
In fact, Gulke says the U.S. has been exporting meal and the technical systems he uses are indicating a buy signal on a monthly basis. “Which is odd considering this is the time Argentina is harvesting and normally ramps up their soybean crushing and that isn’t happening,” he says.
So far, Gulke says, all of the winter predictions for the grain and oilseed market haven’t come true. “So suddenly we’ve kind of turned upside down to where conventional wisdom was almost 98% wrong. It just didn’t turn out that way,” he says.
The weather has also done a 180. It’s turned from the talk of early planting to planting delays, replanting and even prevent plant in some areas where there has been excessive rain and flooding.
Yet, Gulke thinks most of the acres will still get planted. “It’s probably worse than it has been in years past, but I think they’ll plant well into June even though it’s past the last plant date. You lose 1% of insurance coverage per day pay the cutoff date
Gulke says the weather and crop concerns in the U.S. and globally have helped to spur the rally in the grains and that has pushed the funds to cover much of the short position they held all winter.
“I think that’s making a lot of traders nervous and we as farmers are benefiting from that because the price of grain has come up some,” he says.
For more information contact Jerry at info@gulkegroup.com.
