For the week December corn was down ¾ cent, January soybeans fell cents, December soybean meal was down $10.50 per short ton, December soybean oil soared 215 points, December Hard Red Winter wheat lost 5 ¼ cents, December Soft Red Winter wheat fell a penny and December Hard Red Spring wheat dropped 5 ½ cents.
Many farmers have already wrapped up the 2024 harvest and are putting equipment away for the season.
Jerry Gulke, president of the Gulke Group, says this is a good time to review the year’s markets.
Gulke says the U.S. once again confirmed a bumper corn crop of 15.2 billion bushels and record yields of 183.8 bushels per acre, leaving him to wonder what kind of weather or disaster it will take to affect the supply side of the market.
He says that left corn ending stocks 240 million bushels larger than last year and he sees similar ending stocks for the 2025-26 season, with yield the wild card.
However, Gulke says there are indications corn export demand will rise by another 100 million bushels by March 2025.
Technically, the corn market started to erode in November of 2023 and the high for 2024 was scored on June 28, which was roughly the half way point to the contract lows hit in August.
Gulke says currently corn is trading rangebound or flat awaiting news and direction but there is about 30 cents of carry in the market to July.
When it comes to the soybean market, Gulke says he learned never to underestimate the ability of South America to produce a crop and sell it cheaper than the U.S. in the export market.
“I’m concerned and I learned again that Brazil seems to be not only catching up but has surpassed the U.S. as far as being able to grow a crop,” he explains.
Gulke says a farmer friend in Brazil has reminded him for the last 20 years that Brazil rarely has a crop disaster.
“It rains when it’s supposed to, and it doesn’t rain when it’s not supposed to. And he said, we live in the tropics, and that’s the way it works. And here we go again this year, we came through with the crop,” he says.
Even this fall, Gulke says the U.S. soybean market tried to build in some weather premium on Brazil drought and planting delays only to have them start to receive rain the last few weeks and get nearly caught up on planting.
Plus, the build in U.S. carryover on soybeans from last year’s 342 million bushels to this year’s 550 million also served as a headwind.
Gulke says the higher ending stocks resulted in a roughly $3 drop in prices from the 2023 harvest to this fall and it will keep a cap on prices moving forward especially if Brazil raises a record soybean crop.
Technically for soybeans he says the gap lower open on January 2, 2024, set the stage for the year as prices continued to decline from there and remove weather premium after South America started receiving beneficial rains.
July soybeans, according to Gulke, have a carry of 60 cents and capturing that carry may be the best way for producers to see any price appreciation without a disaster in South America.
For wheat he says the lesson is simple.
The U.S. is not the cheapest seller and can not compete against Russia.
“We’re a small fish in a big pond,” he says.
For more information contract Jerry at info@gulkegroup.com.
