Grain markets have a history of changing direction around a holiday. They sure did after Thanksgiving.
March corn prices were down 13.25¢. January soybean prices were down 28.25¢ for the week ending Dec. 4. March wheat down 30¢.
A change in South American weather was a big factor in the shift of corn and soybean prices. Shortly after Thanksgiving, rains arrived in Argentina, says Jerry Gulke, president of the Gulke Group.
“Once you put a crack in the dike, so to speak, the dry areas get smaller and the better areas get bigger,” he says. “If it only happens for one day, it’s an anomaly. If it continues to happen, you start to replenish some sub-soil moisture. Pretty soon you have less of the land affected by drought. The function of the market is to discount a problem, and it did that.”
As a result, corn and soybean prices took a pause from their upward trajectory.
“The move in corn was interesting, as it posted a weekly key reversal down,” Gulke says. “We’ve had an uptrend since August, and we broke that uptrend. So, if it’s raining in South America on Monday morning, the Bulls in the corn market aren’t going to be happy and neither are the beans.”
Chinese buying has also stalled a bit, Gulke says.
“Now we have to get a “quantifiable” crop problem somewhere to give us back a second chance to get where we’re at,” he says. “We had wonderful chance to lock in some “good” cash flows. Now the market it looks like it wants to head the other way for a while.”
Even though prices are down for the week, they are still higher than several months ago. This is putting pressure on acreage mix for 2021. For now, Gulke says, the market is requesting more soybean acres.
“The market is trying to make sure every bean possible is going to get planted, and that relationship between soybeans and corn will be continued to be watched,” he says. “We’ll have to see what things looks like in the spring and how the outcome from South America. The stage is set for the markets to be pretty concerned about the crop in the United States next year.
Overall, Gulke says, U.S. farmers will need to plant around 89 million acres of soybeans just to theoretically keep carryover under 300 million bushels.
“And that doesn’t allow for a lot of weather problems next summer,” he says. “The party’s not over yet but it’s certainly taking a pause. What I’ve always tried to stress is timing is important in these markets.”
Read More
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Jerry Gulke: Not Your Father’s Markets
Jerry Gulke: Lessons Learned in 30 Years of Grain Marketing
Find more written and audio commentary from Gulke at AgWeb.com/Gulke
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.
