For the week, December corn was 3 cents higher, January soybeans lost 7¼ cents, January soybean meal was up $1.60 per short ton and January soybean oil was up 66 points. December Chicago wheat lost 24½ cents, December Kansas City wheat dropped 22 cents and December Minneapolis wheat was down 15¼ cents.
The focus of the soybean market continues to be South American weather and crop expectations. Soybeans and soybean meal saw profit taking at the end of the week with forecasted rains for Brazil. Jerry Gulke, president of the Gulke Group, says whether or not those rains confirm will set the direction for the soybean complex moving into next week and beyond.
However, Gulke says Brazil’s crop is getting smaller, and the market is trying to determine how much smaller.
“Our contacts are telling us the soybean crop is less than 160 million metric tons. We’ve already lost about 4 million metric tons of soybeans and about the same amount of corn that is unretrievable,” he says. If the rains don’t materialize soon in central and northern Brazil, the market could quickly shoot higher putting risk premium back in.
There is some replant going on in the south where it’s been too wet as well as in areas where it’s been too dry. According to Gulke, some corn won’t get planted, but instead those acres might be put into longer season soybeans. However, with soybean prices as high as they are, he thinks there’s incentive for Brazilian farmers to replant or plant as long as they can. Meanwhile Argentina weather is better to start the season than a year ago.
Gulke says traders are a bit nervous, which is why soybeans only lost about 7 cents for the week and corn was up 3 cents. The other factor is demand as China has been on a soybean-buying spree. Gulke gets the sense China is short bought and concerned about South American crop problems. The purchases also preceded this week’s meeting between Biden and Xi as a possible goodwill gesture by China. Gulke says while there wasn’t anything constructive for agriculture that came out of the meeting, he thinks China might be in the market for more U.S. soybeans and they might even buy corn.
If farmers have unpriced grain or extra bushels of soybeans from a better-than-expected harvest, what should they do with the potential for a bigger South American weather market? On soybeans, Gulke says, when prices rallied up to near $14, they had about 40% that were unpriced in the cash market, so they sold another 20%.
“We kept the other 20% for ‘gambling stocks’ you keep just in case,” he explains.
He says they have made no sales of 2024 soybeans.
For corn, or even soybeans in storage, farmers should take advantage of the carry in the market.
“When you’re looking at the carry, you’re looking at maybe 18, 20 or 30 cents to July corn and as much in beans,” he says. “Then you sell that carry. Any hedges, whether you’re going to hedge your grain at an elevator or at home, should be put off into that July contract.”
For more information, contact Jerry at info@gulkegroup.com.
