For the week May corn soared 30 cents, December corn was up 16 ¾, May soybeans surged 65 ¾, November up 41, May soybean meal was $16.50 per short ton higher, May soybean oil was up 151 points, May hard red winter wheat was up 10 ½, May soft red winter wheat gained 26 ¾, May hard red spring wheat was up 31 ¼ and November canola tacked on $37.90.
After a volatile week of tariff news and the April WASDE, all of the grain markets posted higher weekly closes.
Jerry Gulke, president of the Gulke Group, says the April WASDE confirmed the tighter balance sheets he had been expecting for several reports.
USDA lowered ending stocks 75 million bu. to 1.465 billion bu. by increasing exports 100 million bu. and cutting feed and residual use by 25 million bu.
The lower old crop carryout will help buffer the 4.7 million additional acres of corn farmers intend to plant this spring and leave less room for error regarding weather.
“Now we’re getting into that 1 .465 billion carryover, which goes into the next year’s crop. So that makes the acres that we had 95 .3, not near as surplus as most people thought,” he says.
USDA is assuming a 181 bu. yield which Gulke says may not be achievable with the current weather.
And he thinks carryout could be even lower than that at 1.4 billion bu. as exports need to be raised another 25 to 50 million bu.
So, with the increasing demand, even more than 95.3 million corn acres may not be enough.
“If you carry that 1.4 forward you need another million acres of corn and if you come in with a 177 yield like last year, you’ve got a problem,” he says.
Gulke says the lower ending stocks were friendly for the corn market and contributed to the higher weekly close but the market also had the tailwinds of the 90-day tariff delay and weather.
May corn also had several positive bull market technical signals that combined with the fundamentals this week:
- May corn moved back into the trading range in March.
- The 50-day moving average was easily surpassed, bringing more fund buying into the market.
- Using USDA’s April WASDE Report as a guide for the May WASDE suggests room to maneuver around weather, tariff repercussions or buying to avert tariffs, even with higher intended corn acres.
Gulke says the one caveat is May corn has rallied and regained 62% of the losses (see chart) so quickly it may tempt more selling recommendations as a precautionary risk management move.
However, he thinks the trade deals struck as a result of the Trump tariffs will bolster demand for corn and even other grains, and combined with weather, that could negate those concerns.
“I still think we’re talking about a major paradigm shift in agriculture that we may be underestimating.This is only 100 days into a four-year term.So, who know what comes later?” he adds.
For more information contact Jerry at info@gulkegroup.com.
