Last week the grain markets showed signs of a bull market potentially starting to fade. For this week, May corn prices were up 18.25¢ and May soybean prices were only up 1.75¢, for the week ending March 19. May wheat prices were down 12¢.
“The increase in the May corn price was in reaction to the rumors that China was going was had made some purchases, and then we had three successive days in a row of large purchases,” says Jerry Gulke, president of the Gulke Group. “That helped that old-crop corn.”
While old-crop prices were even or higher, new-crop corn and new-crop soybean prices were both down for the week, 8.25¢ and 24.75¢ respectfully..
“New-crop soybean prices were down about 25¢ per bushel for the week, and new-crop corn was down about 8¢,” he says. “The market is pushing to ration demand somehow. Right now, the talk in the market is with the weather and the prices is whatever USDA comes out with at the end of the month on acres, it is probably going to ultimately be bigger because the incentive is to plant record acreage is there.”
Another commodity Gulke was watching this week was crude oil, which was down over $4 per barrell this week. That was after crude oil reaching $65 a barrel.
“It went down $5 one day and broke the trend,” he says. “We’ll see if we can get it back down into the $40s again. That’s certainly good news going into planting season. Maybe we’ve seen the high.”
Gulke says traders are looking toward and positioning ahead of the March 31 reports, which include Prospective Plantings and Grain Stocks. In addition, the negotiation talks between the U.S. and China are weighing on markets. The talks quickly became a bit tense, Gulke says.
“China came out and said we should probably redo our capitalistic tendencies and not spread them worldwide anymore because it’s being rejected,” he says. “In fact, he said it’s being rejected by some people in your own country. Whereas, he said in China, their form of economic incentives and so forth are accepted by all the people in China.”
Overall, Gulke says, it wasn’t a good way to start out a meeting: “We’ll see what happens during the weekend.”
Gulke Group will be holding a conference on March 30 and 31 in Shamburg, Ill. (suburb of Chicago). To learn more, visit GulkeGroup.com or call (707) 365-0601.
Technically Speaking by Jerry Gulke
It’s been a while since we’ve updated some price action of interest. It has been a few wild weeks when looking at new-crop prices. It is as if the market is suggesting prices got high enough to bring in mega acres into production, as well as curbing demand at least domestically. This puts into perspective the idea that odds are increasing whatever we get planted along with a normal growing season, will create supplies that are sufficient ahead of what appears to be a big surge in acres from our competitors particularly South America next fall.
Mother Nature will have the final say, but for now conjecture could be that prices at best go sideways, or at worst have topped. Charts show levels of support for short and long term and include a 3-, 5- and 9-day moving average complex that can often add creditability. The question is whether the downdraft last week was an opportunity to buy or the beginning of more downside ahead of mega reports the end of the month.
Check the latest market prices in AgWeb’s Commodity Markets Center.
Jerry Gulke farms in Illinois and North Dakota. He is president of Gulke Group. Disclaimer: There is substantial risk of loss in trading futures or options, and each investor and trader must consider whether this is a suitable investment. There is no guarantee the advice we give will result in profitable trades. Past performance is not indicative of future results.
