For the week December corn was up 8 ¾ cents, November soybeans lost 4 cents, December soybean meal fell $2.50, December bean oil dropped 318 points, December hard red winter wheat lost 1 1/4, December soft red winter wheat gained 7 and December hard red spring wheat fell 12.
New crop corn futures soared Friday to close out the week 8 ¾ cents higher.
Many analysts chalked up the rally to end of month short covering.
Jerry Gulke, president of the Gulke Group, says the reason corn was higher doesn’t matter as much as the price action.
Corn Market Confirming a Low?
Gulke explains that the September contract went back, filled a gap area and tested last year’s low on the day of the bearish August WASDE.
The market quickly absorbed USDA’s hike in corn yield to 188.8 bu. per acre and increase in harvested acres by nearly 2 million acres.
On report day the market filled a gap area and then closed above that level, which Gulke says was a bullish sign.
Since then, the market has rallied nearly 30 cents off the lows.
“I’ll say it again.I think this technical move confirms a bottom in the corn market.”
Next Week’s Price Action Will be Key
Gulke says next week’s action in corn futures is important because a continued rally could provide the first buy signal in the corn market in over six months.
“It looks about as friendly as I’ve seen it in a long, long time. And we have fundamental information to support that, and that’s in the export market demand side of it, but also a smaller crop,” he explains.
The U.S. Corn Crop is Getting Smaller
Gulke says many in the trade say the corn crop is getting trimmed by disease and dryness which is being worked into prices.
While 186 bu. per acre corn yield would still produce a big crop, it chips away at the ending stocks.
“Every bushel we lose is another 80 to 90 million bushels of production,” he says.
Corn Demand is Being Overlooked
Plus, Gulke says the trade and farmers are discounting USDA’s improved demand projections in the August WASDE, which were up 545 million bu. from July.
USDA has throttled corn exports for the 2024-25 marketing year for several months while total commitments continued to run 28% above a year ago.
However, Gulke says the agency finally acknowledged it in August in their new crop corn balance sheets.
“USDA admitted in August that exports are better than expected for new crop corn and we’re probably still 150 to 250 million bu. too light on exports,” he adds.
Gulke says farmers have been too fixated on the record supplies and have overlooked the strong corn demand and the impact it will have in lifting corn prices.
Plus, he thinks trade negotiations with countries like Vietnam are starting to produce some results in the weekly new crop export totals.
Should Producers Store and Wait for the Corn Rally?
Gulke has long been a proponent of on-farm storage as a grain marketing tool.
This year with the carry being offered in the market, storing grain and trying to capture those higher prices being offered in the deferred corn contracts would make sense.
At his farm, Gulke has built enough grain bins to store 150% of his crop and using a storage and hedge strategy he paid for the bin in just a couple of seasons.
“If you can make $.30 to $.50 on the carry through hedging verses $2.00 per bushel for to build storage you can pay it off in three years. Even with interest charges it’s four years and then after that it’s a cash cow,” he explains.
This year with the storage crunch it will really pay back, he adds.
For more information you can contact Jerry at info@gulkegroup.com.
