For the week, May corn was 3 cents lower and December corn lost 1¼. May soybeans climbed 14¼ cents, November was 17 cents higher and May soybean oil up 325 points, while May soybean meal lost $6.70 per short ton. May Chicago wheat fell 9¼, May Kansas City plunged 22¼ and May Minneapolis fell 15¼. December cotton was up 70.
Soybeans closed higher for the week and have posted higher weekly closes three weeks in a row, a strong signal that the market might be forging a low.
Jerry Gulke, president of The Gulke Group, says he has been watching that in addition to other technical signals to confirm a bottom in soybean.
As part of price discovery, the market first had to go low enough to compete with Brazil’s crop. This happened at the start of the year when Brazil’s soybean basis fell and at its widest point was nearly $2 under U.S. prices.
To start the year, November new crop soybeans gapped lower, which Gulke says also told him the Jan. 12 WASDE would be bearish for demand. However, USDA also shocked the market by raising yield for both corn and soybeans in addition to raising ending stocks.
“The WASDE report the following week not only validated the down gap but ended that day at $11.86 versus the high to end 2023 at $12.70 and well below the November high of $13.17,” he explains.
The February WASDE added insult to injury, Gulke says, by pushing ending stocks for soybeans up to 315 million bushels. This started another leg lower in soybeans into the end of February.
Plus, the funds were short, and farmers needed to sell or roll positions on basis fixed and other contracts on old-crop stored inventory at the end of February. That led to more heavy selling pressure.
“November soybeans posted another new low of about $11.22, ironically just above the $11.22 posted the first week of June,” he says. Which may have been a double bottom.
The March 8 WASDE report left ending stocks for soybeans unchanged at 315 million bushels. However, the market closed impressively higher for the week and has extended gains this week as well. According to Gulke, this week soybeans posted the first weekly close above the previous week’s range since November.
“This is turning the three-, five- and nine-week averages long if prices don’t collapse in the next few sessions,” he adds.
Gulke says he’d like to see another higher weekly close next week to help confirm the bottom is in the soybean market as well as a close above $12. A higher monthly close would be even more convincing. If the market starts believing it doesn’t have enough acres that could move soybeans above that mark.
On corn, Gulke says he’s unsure if the low is in or not. May and December corn had lower weekly closes this week, and he thinks the market might be concerned corn acres won’t be down as much as expected. He says warm weather and an early spring will entice farmers to plant more corn and less soybeans. He says the market is telling farmers, “We don’t need you to plant any more corn.”
“I’m leaning more toward the idea there might be a 1.5 million to 2.5 million fewer corn acres than last year and not the 3 million to 3.5 million more acres of soybeans that were projected,” he says.
In February at the Ag Outlook Forum, USDA predicted a 3.9 million acre increase in soybeans for 2024 and 3.6 million fewer corn acres.
For more information, contact Jerry at info@gulkegroup.com.
