For the week May corn lost 10 ¾, December corn fell 3 ¼, May soybeans dropped 9, November soybeans fell 7 ½, May soybean meal gained $1.50 per short ton, May soybean oil plunged 183 points, May hard red winter wheat soared 21 ¼, May soft red winter wheat was 5 ¾ higher and May hard red spring wheat was up 8 ¾.
Corn was down again this week, with the May and July contracts closing around $.60 off the highs set back on Feb. 19.
Jerry Gulke, president of the Gulke Group, says while he is short term bearish on corn his longer-term outlook is still bullish.
Gulke turned bearish on corn after the USDA Ag Outlook forum estimated planting intensions of 94 million acres for corn and an ending stock figure of over 1.9 billion bu. a 400 million bu. increase from this marketing year.
While some in the market pointed toward tariff and trade fears for the large correction in corn futures, Gulke thinks the tariffs have actually been positive for demand.
Plus, he says he got technical sell signals on the day of that report.
“The long-term weekly uptrend from August to February ended with my first weekly sell signal since the positive signal five months earlier,” he explains.
The managed money funds have also been liquidating their long position built in the corn market based on similar technical signals.
According to last week’s CFTC Commitment of Traders Report as of March 4, management money traders exited 117,000 long positions and this week’s report shows they sold another 73,000 contracts.
However, Gulke says this isn’t a huge concern to him and he is still friendly corn long term.
“The funds still haven’t gone short and probably won’t with the planting season right ahead of us but they likely got caught in the shock of that $.60 down move,” he adds.
So, why is his outlook still bullish?
Gulke says its tied to the strong demand for corn, especially exports.
“I think corn export estimates for this year might be underestimated by an additional 100 million bu. and ethanol by 25 million bu. and there are others I respect in the business that feel the same,” he says.
In an upcoming Top Producer article Gulke provides more details but says export loading this year indicate corn leaving the country in the first six months of the marketing year is ahead of last year by more than 8 million metric tons or 320 million bushels.
USDA projects exports to increase by 160 million bu. compared to last year, which saw an increase of 630 million bu. over 2022/23.
If these trends hold true, then ending stocks for the current marketing year are closer to 1.4 billion bu. and that makes the carry in for the 2025-26 marketing year tighter.
What will it take to retest the February highs in corn?
Gulke says if he uses that 1.4 billion bushel carry with USDA’s higher acreage figure of 94 million but lowers yield 2 bu. from their projection to 179 bu. that equate to only 1.57 billion bu. of corn carryout, which is well under USDA’s 1.9 billion.
He says he lowered yield because it will be no better than last year based on the current weather forecast.
Again, Gulke thinks USDA is understating exports and will need to recognize that and tighten the supply and demand tables, but it is unlikely to happen until the May WASDE.
That combined with a weather issue during the planting or growing season could be enough to spark a rally back to the recent highs.
For more information contact Jerry at info@gulkegroup.com.
